OHIO LEGISLATIVE SERVICE COMMISSION
Office of Research Legislative Budget
www.lsc.ohio.gov and Drafting Office
H.B. 447 Bill Analysis
135th General Assembly
Click here for H.B. 447’s Fiscal Note
Version: As Introduced
Primary Sponsor: Rep. Loychik
Effective date:
Mackenzie Damon, Attorney
SUMMARY
Property tax homestead exemption
 Temporarily increases the amount of the property tax homestead exemption.
 Temporarily expands eligibility for the homestead exemption for the elderly and disabled.
 Reimburses school districts from the GRF for 50% of the tax losses from these temporary
changes and other taxing authorities for 100% of their losses.
 Permanently expands the existing homestead exemption for disabled veterans.
 Creates a new homestead exemption for the surviving spouses and minor children of
uniformed service members killed in the line of duty (“Gold Star families”).
 Reimburses local taxing units for the reduction in tax revenue from the expanded disabled
veterans exemption and new Gold Star family exemption in the same manner as other
homestead exemptions.
School district 20-mill floor
 Phases-down the 20-mill property tax floor for school districts in a manner that ties
increased collections from the floor to increases in the Consumer Price Index.
Property tax valuation of farmland
 Sets a minimum value of 10% for the capitalization rate used in the property tax formula
for valuing farmland at its “current agricultural use value,” or CAUV. (An increased
capitalization rate results in lower CAUV values, other factors remaining equal.)
April 17, 2024
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DETAILED ANALYSIS
The bill modifies various components of the state’s Property Tax Law. Several of the bill’s
changes involve the homestead exemption, which reduces the property taxes of seniors, disabled
veterans and other individuals, and certain widows and widowers. The bill’s other changes affect
the formula for valuing farmland for property tax purposes and the 20-mill floor that guarantees
school districts a certain level of property tax revenue.
Homestead exemption expansion
The bill makes several changes to the homestead exemption, including (1) a temporary
increase in the exemption amounts, (2) a temporary expansion of the standard exemption, (3) a
permanent expansion of the exemption for disabled veterans, and (4) the creation of a new
exemption for the surviving families of uniformed service members killed in the line of duty.
Background
Under continuing law, the standard homestead exemption is a property tax credit for the
primary residence, or “homestead,” of qualifying individuals. The credit essentially exempts a
portion of the value of an eligible individual’s homestead from taxation. The exemption amount
for tax year 2023 is $26,200. This exemption amount is increased each year for inflation.
The exemption is available to individuals who are (a) at least 65 years of age or older,
(b) permanently and totally disabled, or (c) at least 59 years old and the surviving spouse of a
person who previously received the exemption. In addition, homeowners must have an Ohio
modified adjusted gross income of $36,100 of less for tax year 2023. This income limit also
increases each year for inflation. Homeowners who received the exemption before 2014 are not
subject to the income limit.
Also under continuing law, an “enhanced” exemption is available for homes of military
veterans who are totally disabled and their surviving spouses and for surviving spouses of peace
officers, firefighters, or other emergency responders who die in the line of duty or by an injury
or illness sustained in the line of duty. No income limit applies to either enhanced exemption. For
2023, the enhanced exemption equals $52,300. Like the standard exemption, the enhanced
exemption amount also increases for inflation each year.1
Temporary expansion
The bill temporarily increases the standard exemption and the enhanced exemption for
surviving spouses of public safety officers for three years. The enhanced exemption for disabled
veterans will increase for one year under the same scheme, but then will permanently expand,
beginning in tax year 2024, as described below.
For individuals who already qualify for the standard exemption, the exemption will
increase to $35,000 in 2023, from $26,200. For individuals who receive the enhanced exemption,
1 R.C. 323.152 and 4503.065.
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the benefit will increase from $52,300 to $65,000. Each of these amounts will further increase
for inflation in the second two years of the three-year expansion period.
In addition, the bill extends the standard homestead exemption to individuals with a
household income of up to $80,000 who would otherwise qualify for the existing exemption,
were it not for the income limit. These homeowners will receive a lesser benefit based on their
income tier. For the 2023 tax year, the tiers are as follows:
Income Exemption amount
$36,101-$51,000 $26,250
$51,001-$66,000 $17,500
$66,001-$80,000 $8,750
As with the other exemption amounts, under both current law and the bill, these
exemption amounts will increase for inflation in each of the two later years of the temporary
expansion period. However, the income amounts, aside from the $36,101 threshold, will not
increase for inflation during the latter two years.2
Local government reimbursement
Under continuing law, the state fully reimburses local governments for their property tax
revenue loss resulting from the homestead exemption. The bill modifies this reimbursement
scheme by only reimbursing local, city, and exempted village school districts for 50% of their
revenue loss from the bill’s temporary expansion. All other local governments, including other
schools like joint vocational and cooperative education school districts, will be fully reimbursed
for their revenue loss. All local governments, including all school districts, will continue to be fully
reimbursed for their revenue loss from the existing homestead exemptions.3
Temporary period and application procedures
Except in the case of the disabled veteran exemption described below, the temporary
increases apply to tax years 2023, 2024, and 2025, in the case of real property, and tax years
2024, 2025, and 2026, in the case of homes subject to the manufactured home tax. The difference
in application is a result of the fact that the manufactured home tax is payable on a current-year
basis, whereas property tax is payable in arrears.
Since the bill would take effect after the standard deadline for receiving the homestead
exemption in tax year 2023 or, in the case of manufactured homes, tax year 2024, the bill
specifies that individuals can apply for the expanded exemption any time before the late
application deadline for those tax years – December 31, 2024. Any amount that an individual
2 R.C. 323.152(F), 323.153, 4503.065(G), and 4503.066.
3 R.C. 323.156 and 4503.068; Section 4(B).
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overpaid before their application is approved will be credited against the individual’s future
property taxes or refunded, in the same manner authorized in continuing homestead exemption
law.
The bill specifies that, if a person already qualifies for the homestead exemption under
existing law, that person is not required to submit a new application or update their existing
status solely in order to receive the bill’s increased benefit.4
Homestead exemption for disabled veterans
Under the bill, the homestead exemption for disabled veterans will increase from $52,300
to $65,000 in tax year 2023, as described above. However, in lieu of the increases in the second
two years of the temporary expansion described above, the bill permanently expands the
exemption beginning in tax year 2024.
Pursuant to this expansion, veterans who currently receive the exemption – those who
are totally disabled – will receive a full property tax exemption of the veteran’s homestead, not
including an exemption from special assessments. In addition, certain veterans who are not
totally disabled will become eligible for an exemption based primarily upon the veteran’s
disability rating.
Under current law, a veteran qualifies for the enhanced exemption if the veteran has one
or more service-connected disabilities that have received either (1) a total disability rating (i.e., a
disability rating of 100%) or (2) a total disability rating for compensation based on individual
employability. Under the latter scenario, the U.S. Department of Veterans Affairs (VA)
determines that a veteran is treated as if he or she has a 100% rated disability if (1) the veteran
has at least one service-connected disability rated at 60% or higher, or two or more service-
connected disabilities with at least one rated at 40% or higher and a combined rating of 70% or
more and (2) the veteran cannot hold steady employment.
The bill provides a full exemption for veterans who meet these current requirements and
further expands the exemption to apply to any veteran with a disability rated at 10% or greater.
For the latter veterans, the exemption amounts are tiered based on the veteran’s disability
rating, age, or condition. For tax year 2024, the exemption amounts will equal the following:
Disability rating Exemption amount
Totally disabled Full exemption
Disability rating of at least 70%; $12,000
age 65 or older with a disability
rating of at least 10%; totally
blind; or loss of the use of one or
more limbs
4 R.C. 323.152 and 4503.065; Section 4(A).
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Disability rating Exemption amount
Disability rating of at least 50%, $10,000
but less than 70%
Disability rating of at least 30%, $7,500
but less than 50%
Disability rating of at least 10%, $5,000
but less than 30%
Similar to the existing exemption for disabled veterans, the Tax Commissioner must
increase these exemption amounts each year for inflation.
Additionally, as under the current enhanced exemption, the bill’s enhanced exemption
for disabled veterans extends to the surviving spouse of the veteran, until the spouse dies or
remarries. Also similar to the existing exemption, the bill does not require the veteran to meet
an income test.5
Homestead exemption for Gold Star families
The bill also creates a new homestead exemption for the families of a uniformed service
member killed in the line of duty, often referred to as “Gold Star” families. The exemption is
available beginning in tax year 2024 to such service members’ surviving spouses and minor
children.
For surviving spouses, the exemption amount equals $5,000. The exemption continues
until the spouse dies or remarries. A $5,000 exemption is also available for homesteads owned
by a surviving minor child. If there is more than one minor child who owns a homestead, the
$5,000 exemption is divided equally amongst them. The exemption for minor children continues
until the child turns 18, dies, or marries.
The new exemption extends to the surviving family of members of the uniformed services,
which includes the branches of the armed forces along with the National Oceanic and Atmospheric
Administration and the Public Health Service. Like the other enhanced exemptions, the Gold Star
family exemption does not require the surviving spouse or minor child to earn below a certain income
to qualify. The exemption does not apply to the surviving family of a dishonorably discharged
uniformed service member.6
Application requirements
As with all current homestead exemptions, a surviving spouse or minor child must apply
to the county auditor to qualify for the exemption. The applicant must include with this initial
application a copy of the service member’s U.S. Department of Defense form DD-1300 Report of
5 R.C. 323.151, 323.152(A)(3), 323.153, 4503.064, 4503.065(B), and 4503.066.
6 R.C. 323.151, 323.152(A)(4), 4503.064, and 4503.065(D).
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Casualty or other federal documentation showing the service member was killed in the line of
duty. After this initial application, no further application is needed to maintain the exemption,
but the auditor must be notified if the homestead no longer qualifies for the bill’s exemption.
(This notification is required under continuing law to report ineligibility for all current homestead
exemptions.)7
Reimbursement of local taxing units
As with all current homestead exemptions, local taxing units are reimbursed by the state
for the reduction in property tax revenue that results from the bill’s expanded disabled veteran
enhanced exemption and new Gold Star family enhanced homestead exemption. The
reimbursement is paid from the GRF semiannually or annually.8
Reduction of school district 20-mill floor
Continuing property tax law applies a “tax reduction factor” to real property, with the
goal of preventing property taxes from increasing at the same rate as property values. Basically,
each year when property values increase, property tax collections are adjusted downward so that
taxing districts receive the same amount of revenue they received in the previous year. These
reductions are converted to an “effective tax rate.” The tax reduction factor, under the Ohio
Constitution, cannot apply to unvoted, or inside millage, or certain other types of operating
levies, like emergency fixed-sum levies.9
There are some exceptions to the tax reduction factor – one of which is the 20-mill floor,
which guarantees that a school district’s effective tax rate for operating expense levies cannot
fall below 20 mills. Instead, the tax reduction factor can only reduce a school district’s operating
levy collections to 20 mills – once that “floor” is reached in a school district, the reduction factor
cannot reduce effective rates any further. Consequently, any growth in property tax values will
produce a corresponding increase in taxes from those 20 mills. If property values increase 35%
in a school district that is “on” the 20-mill floor, homeowners will generally see a larger tax
increase than in other districts that are not on the 20-mill floor. The tax increase will very likely
be less than 35%, since the tax reduction factor will still apply to other local tax levies (e.g., county
and township levies), but since school district levies typically make a majority of a homeowner’s
property taxes, the 20-mill floor will have a significant impact.
The bill
The bill would decrease each school district’s 20-mill floor each year, with the goal that
increased tax collections from the floor would not exceed increases in the Consumer Price Index
(CPI) inflation rate. Although the bill includes a formula based on this premise, the effect of the
bill is more complicated, as illustrated with the following example:
7 R.C. 323.153 and 4503.066.
8 R.C. 323.156 and 4503.068.
9 Article XII, Section 2a, Ohio Constitution.
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Example
Consider a school district that is on the 20-mill floor. Of this 20-mill floor, there are 5 mills
of inside millage, which cannot be reduced by the tax reduction factor, and 15 mills of outside
millage. Assume that the total taxable value of all property in the district in tax year 2024 is
$1 billion. In 2025, due to a reappraisal, that total taxable value increases to $1.5 billion.
Under current law, the 20-mill floor ensures that the taxes collected for operating
expenses would equal $20 million in 2024 (2% of $1 billion) − $5 million from inside millage and
$15 million from