County Auditors Support Tying Homestead Exemption Benefit to Inflation

“Good First Step”

August 16, 2023

COLUMBUS, OH – Under current law, the Homestead Exemption allows low-income senior citizens and disabled Ohioans to reduce their property tax bills by shielding some of the market value of their homes from taxation. The exemption, which takes the form of a credit on property tax bills, allows qualifying homeowners to exempt up to $25,000 of the market value of their homes from all property taxes. For example, a home with a market value of $100,000 is billed as if it is valued at $75,000. The program offers an enhanced exemption of $50,000 for disabled veterans. 

A provision enacted in the state budget bill (Sub. HB33) would annually tie the homestead exemption benefit to the rate of inflation. This means that the value being credited for Homestead would increase from $25,000 for Traditional Homestead and $50,000 for Veteran Homestead each year based on GDP inflation. So those receiving Homestead would see an increase in savings yearly instead of a flat savings as is current law. 

The budget provision will be effective Oct. 3, 2023, and will first be implemented in 2024 for 2023 property taxes. This is the first improvement to the Homestead Exemption since 2007 and a step in the right direction for future reforms.

Lorain County Auditor Craig Snodgrass,  president of the County Auditors’ Association of Ohio said, “My colleagues across the state and I hear regularly from residents who are thankful for the savings from this exemption. But as time has passed with no change to the value of the exemption, the effect of this critical benefit has declined. Since 2007, when the exemption was locked at $25,000, the value of the real dollar savings of the exemption has gone down more than 20%. Continued new levies and higher tax rates at the local level means that the cost of property taxes has increased to property owners, while the savings to those on Homestead has stayed flat and residents see less of a benefit. Auditors firmly believe our seniors should not be taxed out of their homes.” 

Auditors across the state supported the budget provisions increasing the Homestead Tax Benefit for two reasons. “One, we all hear directly from our seniors on a fixed income when they pay their tax bill, how difficult it is to get by with rising costs and taxes”, Snodgrass said. “Homestead doesn’t solve their problems, but it makes their financial decisions easier with the savings.” 

“The other reason we are supportive of increasing Homestead savings is that this is one of the tax credits or exemptions which does not harm other property taxpayers as the state, not other properties in the taxing district, pay for the savings”, said Ashtabula County Auditor David Thomas.

Many incentive programs lead to rising tax rates to other property owners to keep local government revenue whole under HB 920. Homestead is instead a reimbursement from the State. 

Thomas commented, “while the budget provisions are a step in the right direction, there’s more that must be done to provide relief to Ohio’s seniors and disabled property owners.” 

Rapidly rising property values and the number of local levies passed by voters has created the perfect storm for seniors. Many Auditors urged lawmakers to apply the inflationary adjustment retrospectively to 2007 when the $25,000 Homestead benefit was set. 

“We can also follow states like Florida and Texas in providing continued meaningful relief through increasing the exemptions to $50,000 for traditional Homestead and $100,000 for disabled veterans Homestead,” Thomas shared. “The language placed in the budget bill is a start to build off of for the future.”

The Budget Bill also created the Joint Committee on Property Tax Review and Reform. The Committee will be made up of ten (10) members of the legislature and is charged with issuing a report by December 31, 2024.

County Auditors look forward to participating and providing recommendations to the Joint Committee on Property Tax Review and Reform, Thomas said. “The County Auditors’ Association has already been surveying its members for property tax relief ideas to recommend to the Joint Committee.”