At a recent Statesboro City Council work session, Robert Fisher, Deputy Chief Appraiser with the Bulloch County Board of Tax Assessors, presented an overview of House Bill 581 (HB 581). This legislation, which was approved in the 2024 General Assembly and subsequently passed by voters in November with 62% support statewide and locally, introduces significant changes to property tax assessments and sales tax options for local governments.
Floating Homestead Exemption and Its Impact
The key provision of HB 581 is the implementation of a statewide floating homestead exemption. Currently, Bulloch County only offers state-mandated homestead exemptions, including a $2,000 exemption for homeowners and a $10,000 school exemption for senior citizens. The new law aims to stabilize property taxes by capping annual increases in taxable value to the rate of inflation, as determined by the Consumer Price Index (CPI).
This exemption works by adjusting taxable property values so they do not increase beyond the rate of inflation. For example:
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If a home's assessed taxable value increases from $100,000 to $110,000 due to market conditions, the exemption offsets the $10,000 increase.
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Under HB 581, if the CPI is 2%, the assessment would be capped at $102,000 instead of $110,000, effectively exempting $8,000 from taxation.
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This system prevents dramatic tax hikes during hot housing markets while allowing for gradual, inflation-based adjustments.
This exemption applies automatically to homeowners already receiving a homestead exemption. However, new applicants must apply by April 1 to receive the exemption for 2025.
Opt-Out Deadline Approaching
Local governments have until March 1, 2025, to opt out of the floating homestead exemption. If no action is taken, the exemption will automatically apply to all homesteaded properties. No jurisdictions in Bulloch County have indicated plans to opt out. However, pending state legislation could mandate participation for all local governments, making the opt-out decision potentially irrelevant.
If local governments choose to opt out, they must hold three public hearings before making a decision.
City Manager Charles Penny noted that while the exemption primarily benefits homeowners, it shifts the tax burden to other property classes, including commercial and rental properties.
A New Sales Tax for Property Tax Relief
Another major component of HB 581 is the creation of a new local option sales tax (LOST) aimed at reducing property taxes. This flexible local option sales tax (FLOST) would allow local governments to impose a sales tax of up to 1% to offset lost property tax revenue.
Requirements for implementing this tax include:
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All municipalities within a county must participate in the floating homestead exemption for the tax to be an option.
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Local governments must establish an intergovernmental agreement (IGA) detailing the tax rate, duration (up to five years), and revenue distribution.
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The tax must be approved by voter referendum, separate from the constitutional amendment that enabled HB 581.
If adopted, the sales tax revenue would be used exclusively to reduce property taxes, similar to how the school board uses its current education sales tax to offset millage rates. Penny emphasized that this tax is not additional revenue for the city but rather a mechanism to lower property taxes for residents.
If any city within Bulloch County opts out of the floating homestead exemption, the opportunity for the sales tax will be lost for all jurisdictions.
Potential Concerns and Policy Considerations
Mayor Jonathan McCollar and other council members raised concerns about who bears the burden of a sales tax-based revenue shift, particularly for lower-income residents and seniors who may pay a higher percentage of their income in sales taxes. While a sales tax allows visitors and shoppers to contribute to local revenue, it can also disproportionately impact lower-income residents.
Additionally, property tax exemptions do not eliminate taxes but instead shift them to other property types. Without a sales tax to offset the loss in property tax revenue, millage rates could increase, meaning commercial and non-homesteaded property owners would shoulder more of the tax burden.
New Rollback Rate Requirement
HB 581 also introduces an estimated rollback millage rate requirement. Local governments must now submit an estimated rollback rate to the tax commissioner before assessment notices are sent out. If the final adopted millage rate exceeds this estimate, tax bills must include a disclaimer stating that taxes were raised beyond the estimated rollback rate.
Fisher advised that the council begin discussing millage rates earlier in the year to comply with this new requirement, which takes effect in 2025.
If the adopted millage rate exceeds the estimated roll-back rate, then a disclaimer is included on the tax bill stating the name of the governing authority that exceeded the estimated roll-back rate and that this will result in an increase of taxes owed.
What’s Next?
As HB 581 takes effect in 2025, local governments must decide whether to opt out of the floating homestead exemption before the March 1 deadline. Additionally, discussions about introducing a sales tax to offset property tax reductions will likely continue, with a possible referendum as early as November 2025.
City officials will need to weigh the benefits of tax relief for homeowners against the potential financial impacts on commercial properties and lower-income residents. The decision on whether to introduce a new sales tax could significantly shape Statesboro’s fiscal landscape in the coming years.