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 in property tax revenue, the bill increases the gross receipts tax rate from 4.2% to 5% for retail sales and services, including telecommunications and utilities, and raises the special amusement excise tax rate to 5%. Additionally, adjustments are made to the excise tax on farm machinery and equipment. The bill ensures that the increased tax revenues from these changes will support school district funding for both general and special education, maintaining financial stability in educational services.

Moreover, the bill establishes a special education fund for school districts, funded through a property valuation-based levy, specifically aimed at addressing 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, as determined by the Department of Revenue. The bill also mandates annual increases in state aid appropriations based on local need starting in 2026 and adjusts the tax rate on rental vehicles to five percent. Most provisions of the bill are set to take effect on January 1, 2026, while repealing a previous law that would have reverted these amendments by June 30, 2027.

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