The proposed bill aims to significantly alter the property tax landscape for owner-occupied single-family dwellings by setting the maximum mill levy for these homes to zero, effectively eliminating property taxes for this category. To offset the loss of property tax revenue, the bill increases the gross receipts tax rate from 4.2% to 5% for various services and sales, including retail goods, telecommunications, and utilities. Additionally, it modifies the excise tax on the use of services and tangible personal property to align with the new gross receipts tax rate. The bill ensures that school districts will not face funding reductions for general and special education by utilizing the increased tax revenues from other sources, while clarifying that these changes will not affect the mill levies for other types of real property.

Moreover, the bill establishes a special education fund for school districts, funded by a levy based on property valuations, specifically targeting the special education needs of children within the district. The levy will be calculated based on a median assessment level of eighty-five percent of market value, and it allows for expenditures on assistive technology as specified in students' individualized education plans. The bill also includes provisions for adjusting local effort and state aid in relation to local need, mandating that state aid appropriations must increase annually by the percentage increase in local need starting in 2026. Additionally, it introduces a new tax rate of five percent on rental vehicle gross receipts, replacing the previous rate of four and two-tenths percent, with most provisions set to take effect on January 1, 2026.

Statutes affected:
Introduced, 01/29/2025: 10-12-42, 10-45-2, 10-45-5, 10-45-5.3, 10-45-6, 10-45-6.1, 10-45-6.2, 10-45-8, 10-45-71, 10-46-2.1, 10-46-2.2, 10-46-58, 10-46-69, 10-46-69.1, 10-46-69.2, 10-46E-1, 10-58-1, 13-37-16, 13-37-35.1, 13-13-71, 13-13-72, 13-13-72.1, 32-5B-20