Senate Finance adopts homestead exemption plan D as placeholder, asks Tax Dept. and JFO for refinements

Senate Finance heard detailed modeling from the Joint Fiscal Office on two homestead-exemption designs intended to produce tax-bill changes similar in cost to current income-sensitivity law for fiscal year 2025.

Julie, an analyst with the Joint Fiscal Office, presented two structures labeled "exemption C" and "exemption D." Julie told the committee that the first structure "would cost approximately 300,000 less than income sensitivity in fiscal year 20 25," and that exemption C included a flat house-site-value cap of $400,000 and a phase-out beginning near $115,000 in household income. She said exemption D "would be a homestead exemption d. This would cost approximately 1,600,000.0 less than income sensitivity in fiscal year 20 25," with a stepped cap that phases at $50,000 and phases out at $100,000 in household income.

Both structures were designed to reallocate the same overall cost so that lower-income, lower-valued homestead households would generally see average decreases while higher-wealth households could see increases compared with current law. Julie explained the models compare each proposal to "FY25 current law liability" and that the distributional effects differ across income and house-value cells.

Committee members expressed concern about sizable four-figure tax increases for some households under either design and the difficulty of modeling the current property-tax-credit (PTC) interactions. Jake Feldman of the Department of Taxes told the committee, "I think in this case, punting is not a bad thing," and offered to work with staff in December and January on additional studies and alternative proposals. Rebecca Samrock had emailed a suggested study approach, and members asked the tax department to consider indexing house-site values to a real-estate index instead of CPI if they return with refinements.

After discussion, committee members agreed to place exemption D in the amendment as a placeholder with a direction for the tax department and JFO to return with improved or alternative proposals before conference committee consideration and to include a fallback trigger tied to any later foundation-formula implementation. Committee members discussed revisiting the provision in 2026 if necessary and left the consultant and budget numbers as placeholders to be verified by JFO and the Tax Department.

No recorded roll-call vote was included in the transcript; the transcript shows a committee consensus to include plan D as a placeholder and to seek follow-up work from Tax and JFO.