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Committee advances HB1116 substitute to phase in larger homestead exemptions and create local homestead option sales tax

Ablorem Subcommittee; Public Policy and Finance Committee · February 19, 2026

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Summary

The Public Policy and Finance Committee passed a substitute to HB1116 (LC339873s) that phases in larger homestead exemptions between 2027 and 2031, establishes a local homestead option sales tax (LHOST), and preserves exemptions for bond-funded projects; committee passed the substitute by voice vote.

The Public Policy and Finance Committee advanced a substitute to HB1116 (LC339873s) after a presenter reviewed changes to local homestead relief, financing mechanics and ballot and distribution rules for a local homestead option sales tax (LHOST).

The presenter described a phased homestead exemption schedule in the enabling legislation: "it will phase in a homestead exemption, starting in 2027 at 10,000 from 2,000 up to 30,000 in 2029 and 60000 in 2031. Then in effective in 2032, all homestead property would be exempt after the first year of of taxes paid." He said the substitute removes or adjusts several caps, clarifies ad valorem references, preserves bond exemptions from the 3% cap in multiple sections, and adds language to align distribution and renewal mechanics for LHOST with municipal requests. The presenter noted that updated text had not yet been posted online and that staff would continue considering late feedback from cities and counties.

Committee members asked questions about the bill text and online availability; with no substantive objections raised on the floor, the committee took a motion on the substitute and passed it by voice vote. The chair later called a separate motion on HB1116 (LC339873s); that motion also passed by voice vote and the bill moved forward out of committee.

The substitute includes conforming changes aimed at local implementation: removing a cap in section 2, permitting local homestead relief grants, establishing a framework for local finance assessments for essential services and capital projects, and changing the statutory label from "in host" to "l host" to mirror the resolution language. It also addresses distribution across municipalities by tying the threshold to at least 50% of eligible municipal residents rather than the entire district. Presenters said that bond-funded exceptions and school-digest adjustments were added to accommodate requests from school systems and local governments.

The committee recorded voice votes but did not record individual member tallies in the transcript. The presenter said updated substitute files would be posted online for committee members to review prior to subsequent action.