3.2.26 NSDA Monitoring State-Level Proposals to Eliminate or Reduce Property Taxes
With rising property valuations and a focus on affordability, several states, red and blue, are currently considering significant changes to property tax structures, including proposals to substantially reduce or eliminate property taxes on homeowners. Because property taxes represent a primary funding source for special districts, NSDA is closely monitoring these developments as an important public finance policy issue.
Property taxes account for a substantial share of local revenue nationwide, funding fire protection and emergency services, water and wastewater infrastructure, parks and recreation, transit, ports, libraries, and other essential public services like Mosquito Abatement.
Proposals under consideration vary by state in scope, timeline, and replacement revenue strategies. While multiple states have already reduced or restructured property tax such as Colorado and Montana, others are considering additional reform such as Illinois, Iowa, Kansas, Nebraska, Michigan, New Jersey, Ohio, Oklahoma, Pennsylvania, and Wyoming. And this list is not exhaustive.
Here’s a snapshot from a few recent articles across the US. *Details may have changed since the time of this writing.
Florida
Florida policymakers are debating several proposals to reduce or eliminate property taxes on primary residences. Governor Ron DeSantis has expressed support for placing a property tax measure before voters. Analysts have noted that replacing lost revenue could require significant increases in other taxes, such as sales taxes, depending on the final structure adopted.
Georgia
In Georgia, House Republicans have introduced legislation to phase out most homeowner property taxes by 2032. The proposal would significantly increase the homestead exemption over several years and shift local governments toward greater reliance on sales taxes and service-based assessments. The plan would require constitutional changes and voter approval.
Indiana
Indiana lawmakers are considering HB 1288, which would abolish taxes on tangible property after 2026 and eliminate property taxes entirely in 2027. The proposal contemplates expanding the state’s sales and use tax base to cover most services, with revenues redistributed to local governments.
North Dakota
North Dakota officials are pursuing a phased approach to eliminating most homeowner property taxes. The state is using earnings from its oil tax savings account to expand a primary residence tax credit, with the long-term goal of reducing property taxes to near zero for most homeowners within the next decade.
Texas
Texas has already enacted property tax reduction measures in recent years through rate compression and expanded homestead exemptions. Governor Greg Abbott has proposed eliminating school property taxes, potentially using state budget surpluses to offset lost revenue, though long-term funding mechanisms remain under discussion.
These proposals raise central public finance questions about revenue stability, long-term infrastructure funding, and replacement tax structures. Policymakers are evaluating whether reductions would require spending adjustments, increased reliance on sales or income taxes, expanded fees and assessments, or use of state-level surpluses and reserve funds.
NSDA will continue to monitor these developments and assess potential impacts on special districts and the essential services they provide. As legislative sessions advance and ballot measures take shape, member districts may wish to stay informed about how changes in state tax policy could affect local revenue structures and service delivery.
https://www.foxbusiness.com/politics/states-considering-eliminating-property-taxes-homeowners
https://itep.org/state-rundown-1-28-state-tax-cutting-plans-face-scrutiny/