EXPAND HOMESTEAD PROPERTY TAX CREDIT

FOR DISABLED VETERANS WHO LEASE OR RENT

House Bill 5278

Sponsor:  Rep. Henry Yanez

Committee:  Tax Policy

Complete to 12-2-14

A SUMMARY OF HOUSE BILL 5278 AS INTRODUCED 2-4-14

House Bill 5278 would amend the General Property Tax Act to increase the homestead property tax exemption for disabled military veterans, spouses, and surviving spouses who lease or rent a homestead. 

Starting with tax year 2014, veterans who receive compensation from the Veterans Administration or the Armed Services at the 100% disability rating for service-incurred disabilities would receive a refundable credit against their income tax liability equal to 20% of their annual rent, not to exceed the total property tax assessed on the homestead, regardless of the type of homestead leased or rented.  [The credit would also be subject to the $1,200 annual maximum.]

For those who qualify, this credit would replace the existing homestead property tax credit available to disabled veterans.  The new credit would be roughly six times the existing credit for a qualified veteran paying the statewide average rent in a local unit that has the statewide average property tax rate (subject, as noted to the $1,200 maximum).

FISCAL IMPACT:

As written, the bill would reduce net state income tax collections by $4 million per year, and would affect the General Fund.  This estimate is based on average rents and property tax rates for the state as a whole, as well as the best available data on disabled veterans living in the state.  There would be no impact on local tax collecting units or the School Aid Fund.

                                                                     Legislative Analyst/Fiscal Analyst:   Adam Desrosiers

■ This analysis was prepared by nonpartisan House staff for use by House members in their deliberations, and does not constitute an official statement of legislative intent.