HOUSE BILL NO. 2038 103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE TERRY.
4088H.01I JOSEPH ENGLER, Chief Clerk
AN ACT To amend chapter 137, RSMo, by adding thereto two new sections relating to property tax programs for vulnerable individuals.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 137, RSMo, is amended by adding thereto two new sections, to be 2 known as sections 137.104 and 137.107, to read as follows: 137.104. 1. As used in this section, the following terms mean: 2 (1) "Commission", the state tax commission; 3 (2) "Eligible owner", an individual who: 4 (a) Has reached sixty-five years of age as of January first of the determining 5 odd-numbered year; 6 (b) Is the owner of record of the residential real property used as a homestead or 7 has a legal or equitable interest in the residential real property used as a homestead as 8 evidenced by a written instrument; 9 (c) Is liable for the payment of real property taxes on the residential real 10 property used as a homestead; and 11 (d) Has a total household income of one hundred twenty-five thousand dollars or 12 less, as adjusted in each successive calendar year by the incremental increase in the 13 general price level, as defined under Article X, Section 17 of the Constitution of 14 Missouri; 15 (3) "Homestead", the residential real property that is used as a primary 16 residence and the adjacent real property, not to exceed five acres of land, as is 17 reasonably necessary for use of the residence as a home dwelling;
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language. HB 2038 2
18 (4) "Total household income", the combined federal adjusted gross income of 19 the eligible owner; the eligible owner’s spouse, regardless of whether the spouse resides 20 in the homestead; and any dependent of the eligible owner or the eligible owner’s spouse 21 if such dependent resides in the homestead with the eligible owner. 22 2. In addition to all other exemptions authorized under Article X, Section 6 of 23 the Constitution of Missouri or otherwise authorized by law, and as authorized under 24 Article X, Section 6(a) of the Constitution of Missouri, for all tax years beginning on or 25 after January 1, 2027, for an eligible owner, as defined under this section, an annual 26 exemption is granted for property that is used as a homestead equal to one hundred 27 percent of the tax assessed on the homestead. 28 3. The exemption and determination of eligibility under this section applies for 29 tax years beginning on or after January 1, 2027. The claim for an exemption shall not 30 be transferred or assigned. The exemption granted under this section shall be applied 31 after any other property tax exemption, and apart from such exemptions, a taxpayer 32 who received the exemption granted under this section shall not be eligible for any other 33 property tax relief, the property tax credits under sections 135.010 to 135.035, or any 34 other tax credits relating to the owner's homestead under this chapter or chapter 135. 35 4. (1) Except as otherwise provided in this subsection, each eligible owner who 36 has been granted an exemption under this section shall reapply on an annual basis. A 37 taxpayer shall apply for the exemption by filing an application during the application 38 period in effect for the county of his or her residence. The assessor or chief county 39 assessment officer may determine the eligibility of residential property to receive the 40 exemption provided by this section by application, visual inspection, questionnaire, or 41 other reasonable methods. The determination shall be made in accordance with 42 guidelines established by the commission. 43 (2) If the person qualifying for the exemption does not occupy the qualified 44 residence as of January first of the tax year, the exemption granted under this section 45 shall be prorated on a monthly basis. The prorated exemption shall apply beginning 46 with the first complete month in which the person occupies the qualified residence. 47 5. The exemption granted under this section shall not affect the process of setting 48 the tax rate as required under Article X, Section 22 of the Constitution of Missouri and 49 section 137.073 in any prior, current, or subsequent tax year. 50 6. (1) The commission may promulgate all necessary rules and regulations for 51 the administration of this section. Any rule or portion of a rule, as that term is defined 52 in section 536.010, that is created under the authority delegated in this section shall 53 become effective only if it complies with and is subject to all of the provisions of chapter 54 536 and, if applicable, section 536.028. This section and chapter 536 are nonseverable HB 2038 3
55 and if any of the powers vested with the general assembly pursuant to chapter 536 to 56 review, to delay the effective date, or to disapprove and annul a rule are subsequently 57 held unconstitutional, then the grant of rulemaking authority and any rule proposed or 58 adopted after August 28, 2026, shall be invalid and void. 59 (2) No rule promulgated by the commission shall in any way adversely impact, 60 interrupt, or interfere with the performance of the required statutory duties of any 61 county elected official including, but not limited to, the county collector, when 62 performing such duties as deemed necessary for the purposes of this section and the 63 distribution of all other real and personal property taxes. 64 7. Under section 23.253 of the Missouri sunset act: 65 (1) The provisions of the new program authorized under this section shall sunset 66 six years after the effective date of this section unless reauthorized by an act of the 67 general assembly; 68 (2) This section shall terminate on September first of the calendar year 69 immediately following the calendar year in which the program authorized under this 70 section is sunset; and 71 (3) Nothing in this subsection shall prevent a taxpayer from claiming a tax credit 72 properly issued before this program was sunset in a tax year after the program is sunset. 137.107. 1. This section shall be known and may be cited as "The Missouri 2 Homestead Preservation Act". 3 2. As used in this section, the following terms shall mean: 4 (1) "Commission, the state tax commission; 5 (2) "Disabled", as such term is defined in section 135.010; 6 (3) "Eligible owner": 7 (a) Any individual owner of property who: 8 a. Is sixty-five years of age or older as of January first of the tax year in which 9 the individual is claiming the credit authorized under this section or is disabled; and 10 b. Had an income of less than or equal to the maximum upper limit in the year 11 prior to completing an application under this section; 12 (b) In the case of a married couple owning property either jointly or as tenants 13 by the entirety, or in the case of a married couple where only one spouse owns the 14 property, such couple shall be considered an eligible owner if: 15 a. Both spouses have reached sixty-five years of age, or one spouse is disabled; or 16 b. If one spouse is sixty-five years of age or older and the other spouse is sixty 17 years of age or older and the combined income of the couple in the year prior to 18 completing an application under this section did not exceed the maximum upper limit; HB 2038 4
19 (c) In the case of joint ownership by unmarried persons or ownership by tenancy 20 in common by two or more unmarried persons, such owners shall be considered an 21 eligible owner if each person with an ownership interest individually satisfies the 22 eligibility requirements for an individual eligible owner under this subdivision and the 23 combined income of all individuals with an interest in the property is less than or equal 24 to the maximum upper limit in the year immediately prior to completing an application 25 under this section. If any individual with an ownership interest in the property fails to 26 satisfy the eligibility requirements of an individual eligible owner or if the combined 27 income of all individuals with interest in the property exceeds the maximum upper limit, 28 no individual with an ownership interest in such property shall be deemed an eligible 29 owner regardless of whether any such individual could otherwise meet the eligibility 30 requirements; or 31 (d) In the case of property held in trust, the eligible owner and recipient of the 32 tax credit shall be the trust itself, provided that the previous owner of the homestead or 33 the previous owner's spouse: 34 a. Is the settlor of the trust with respect to the homestead; 35 b. Currently resides in such homestead; and 36 c. Would have satisfied the age, ownership, and maximum upper limit 37 requirements for income as defined in this subdivision, but for the transfer of such 38 property. 39 40 No individual shall be an eligible owner if the individual has not paid the individual's 41 property tax liability, if any, in full by the payment due date in any of the three most 42 recent prior tax years, except that a late payment of a property tax liability in any prior 43 year shall not disqualify a potential eligible owner if such individual paid in full the tax 44 liability and any and all penalties, additions, and interest that arose as a result of such 45 late payment. No individual shall be an eligible owner if such person filed a valid claim 46 for the property tax relief credit under sections 135.010 to 135.035; 47 (4) "Homestead", the same meaning given to such term under section 135.010, 48 except as otherwise provided in this section. No property shall be considered a 49 homestead if such property has been improved since the most recent annual assessment 50 by more than five percent of its previously assessed value, except where an eligible 51 owner of the property has made such improvements to accommodate a disabled person; 52 (5) "Homestead exemption limit", a percentage increase, rounded to the nearest 53 hundredth of a percent, that is equal to the percentage increase in tax liability, of a 54 homestead, not including improvements, from one tax year to the next, that exceeds a 55 certain percentage set under subsection 7 of this section. The homestead exemption HB 2038 5
56 limit shall be based on the increase in tax liability from two years prior to application to 57 the year immediately prior to application; 58 (6) "Income", federal adjusted gross income, except that in the case of 59 ownership of the homestead by trust, the income of the settlor applicant shall be added 60 to the income of the trust for purposes of determining eligibility with respect to the 61 maximum upper limit; 62 (7) "Maximum upper limit", the income sum of seventy thousand dollars for the 63 2005 calendar year, increased each successive calendar year by the incremental increase 64 in the general price level, as defined under Article X, Section 17 of the Constitution of 65 Missouri. 66 3. As provided under Article X, Section 6(a) of the Constitution of Missouri, for 67 all tax years beginning on or after January 1, 2027, if in the most recent prior tax year 68 the property tax liability on any parcel of subclass (1) real property increased by more 69 than the homestead exemption limit, without regard for any prior credit received due to 70 the provisions of this section, any eligible owner of the property shall receive a 71 homestead exemption credit to be applied toward the current tax year property tax 72 liability to offset the prior year increase in tax liability that exceeds the homestead 73 exemption limit, except as eligibility for the credit is limited by the provisions of this 74 section. The amount of the credit shall be listed separately on each taxpayer's tax bill 75 for the current tax year or on a document enclosed with the taxpayer's bill. The 76 homestead exemption credit shall not affect the process of setting the tax rate as 77 required under Article X, Section 22 of the Constitution of Missouri and section 137.073 78 in any prior, current, or subsequent tax year. 79 4. Any potential eligible owner may apply for the homestead exemption credit by 80 completing an application. Applications shall be accepted not earlier than April first 81 and not later than October fifteenth of any tax year in order for the taxpayer to be 82 eligible for the homestead exemption credit in the tax year next following the calendar 83 year in which the homestead exemption credit application is completed. The application 84 shall be on forms provided by the commission or by application through the local 85 assessor's office on forms provided by the commission. Forms shall be made available 86 on the commission's website and at all local assessors' and collectors' offices. On such 87 applications, the applicant shall attest under penalty of perjury: 88 (1) To the applicant's age; 89 (2) That the applicant's prior year income was less than the maximum upper 90 limit; 91 (3) To the address of the homestead property; and HB 2038 6
92 (4) That any improvements made to the homestead, not made to accommodate a 93 disabled person, did not total more than five percent of the assessed value of the 94 homestead for the most recent prior tax year. 95 96 The applicant shall also include with the application copies of receipts indicating 97 payment of property tax by the applicant for the homestead property for the three most 98 recent prior tax years. 99 5. Each applicant shall submit the application to the commission or the 100 assessor's office not later than October fifteenth of each year for the taxpayer to be 101 eligible for the homestead exemption credit in the tax year next following the calendar 102 year in which the application is submitted. 103 6. Upon receipt of the applications, the commission shall calculate the tax 104 liability, verify compliance with the maximum income limit, verify the ages of the 105 applicants, and make adjustments to these numbers as necessary on the applications. 106 The commission shall disallow any application if the applicant also has filed a valid 107 application for the property tax credit authorized under sections 135.010 to 135.035. 108 Once the applicant's adjusted tax liability, age, and income are verified, the commission 109 shall determine eligibility for the credit and provide a list of all verified eligible owners 110 to the county assessors, or county clerks in counties with a township form of government 111 notwithstanding section 32.057, not later than December fifteenth of each year. Not 112 later than the following January fifteenth, the county assessors shall provide a list to the 113 commission of any verified eligible owners who made improvements to the homestead 114 not for accommodation of a disability and the dollar amount of the assessed value of 115 such improvements. If the dollar amount of the assessed value of such improvements 116 totals more than five percent of the assessed value from the most recent prior tax year, 117 such eligible owners shall be disqualified from receiving the credit in the current tax 118 year. 119 7. The commission shall calculate the level of appropriation necessary to set the 120 homestead exemption limit for the homesteads of all verified eligible owners at five 121 percent when based on a year of general reassessment or at two and one-half percent 122 when based on a year without general reassessment. The commission shall provide such 123 calculation to the speaker of the house of representatives, the president pro tempore of 124 the senate, and the director of the office of budget and planning in the office of 125 administration not later than January thirty-first of each year. 126 8. If, in any given year, the general assembly makes an appropriation for the 127 funding of the homestead exemption credit that is signed by the governor, the 128 commission shall determine the apportionment percentage to set the homestead HB 2038 7
129 exemption limit by apportioning the appropriation among all eligible applicants on a 130 percentage basis, so that the total amount of all credits applied for in a given year is the 131 denominator and the amount of an applicant's credit applied for in a given year is the 132 numerator. If no appropriation is made by the general assembly during any given year 133 or no funds are actually distributed pursuant to any appropriation therefor, no 134 homestead preservation credit shall apply in such year. 135 9. After determining the apportionment percentage, the commission shall 136 calculate the credit to be associated with each verified eligible owner's homestead, if any. 137 The commission shall send a list of those eligible owners who are to receive the 138 homestead exemption credit, including the amount of each credit, the certified parcel 139 number of the homestead, and the address of the homestead property, to the county 140 collectors, or county clerks in counties with a township form of government 141 notwithstanding section 32.057, not later than August thirty-first. Pursuant to such 142 calculation, the commission shall instruct the state treasurer to distribute the 143 appropriation to the county collector's fund of each county or the treasurer ex officio 144 collector's fund in counties with a township form of government, where recipients of the 145 homestead exemption credit are located, in such amounts as would exactly offset each 146 homestead exemption credit being issued. In no case shall a political subdivision 147 receive, as a result of appropriations, more moneys than it would have received absent 148 the provisions of this section. At the direction of the county collector or the treasurer ex 149 officio collector in counties with a township form of government, funds may be 150 deposited in the county collector's fund of a county or the treasurer ex officio collector's 151 fund or may be sent by mail to the county collector, or the treasurer ex officio collector 152 in counties with a township form of government, not later than October first in any year 153 a homestead exemption credit is appropriated as a result of this section and shall be 154 distributed as moneys in such funds are commonly distributed from other property tax 155 revenues by the county collector, or the treasurer ex off