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Property tax relief & reform moves forward

Updated: Jul 21, 2023

In Montana, it's a done deal, signed by Governor Greg Gianforte. In Idaho, it's almost there.

The surging cost of property taxes throughout the Mountain States has been a hot topic in legislative sessions. Today, the Idaho House joined the debate by passing HB 292.

The legislation is broken down into three years:

  • 2023 - $205,000,000+

  • 2024 & 2025 - $150,000,000

Most of the relief in the first year comes from the state's general fund surplus.

In the second year, 4.5% of what the state collects from sales taxes would be diverted to lower property taxes via a credit. Finally, the bill increases the number of people who would

qualify for the state's property tax relief program (also known as the "circuit breaker.")

Homeowners will know where the reductions come from. The legislation says property tax bills will indicate the savings with text that reads “tax relief appropriated by the Legislature.”

The measure also removes the March date that school districts can use for elections, meaning that elections can only be held in May, August and November.

Part of the legislation also distributes money from the state to school districts for the purposes of lowering bond and levy burdens.

Property tax relief has been built into Idaho’s property tax system for decades. Beginning in 1980, homeowners received a property tax exemption up to 50% of the value of their home, originally capped at $10,000. This exemption was deducted from the assessed value of the home, while the remainder was then the taxable value of the property. In 2006, Idaho began to rely upon the Federal Housing Price Index to set the exemption amount for property taxes and this number fluctuated with the housing market. In 2016, the Idaho legislature voted to cap the property tax exemption at $100,000 (which later increased to $125,000).

Because Montana does not rely on sales taxes, more of the burden is placed on property and income taxes.

Numerous proposals have been put forward to address the issue of rising property taxes in both states.

These changes may help reduce the cost for property owners in the short term, but will they stop overspending at the local level in the long run? It remains to be seen, but some state officials have laid some of the blame of higher property taxes on local governments that continue to spend, and the taxpayers who keep approving new local tax measures.

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