How Georgia’s New Statewide Homestead Exemption Law Could Impact School Districts and Property Values
By Marion D. Williams, CCIM
House Bill 581 was passed by the Georgia General Assembly during the 2024 legislative session and enabling constitutional amendment (HR 1022) was subsequently approved through a statewide ballot question in November 2024. This law introduces a statewide floating homestead exemption to counties, consolidated governments, municipalities, and local school districts, that places limits on how much homestead property assessments can increase for maintenance and operations (M&O) ad valorem tax purposes.
Understanding the Statewide Local Homestead Exemption
Under Georgia House Bill 581, the statewide local homestead exemption caps the annual increase in assessed value of homestead properties at the previous year’s inflation rate, unless there have been significant property changes. This cap is applied based on a base year assessed value, which is set as follows:
For existing homesteads: The base year value will be the 2024 assessed value for the 2025 tax year.
For new homesteads: The base year value will be the assessed value from the year before the homeowner is first granted the exemption.
For example, if a homeowner’s 2025 base year assessed value is $340,000 and their property’s actual value (because of sales in the neighborhood) rises to $365,000 in 2026, the increase will be capped at the 2025 inflation rate. If the inflation rate is 2.9%, (2024 rate of inflation) the increase will be limited to $9,860 making the 2026 assessed value $349,860. Without the cap the value will increase by $25,000 or the full $365,000. The difference between the actual and capped value becomes the exempted amount.
This exemption is in addition to other homestead exemptions, including senior, veteran, and disability exemptions. If a local jurisdiction offers a more favorable base year homestead exemption, the homeowner will receive the greater benefit.
Potential Impact on School Districts
The statewide homestead exemption is expected to limit taxable property value growth, which could reduce school district tax revenues over time. With property assessments capped at inflation, school districts may see slower revenue increases, potentially affecting budgets for operations, salaries, and educational programs.
Potential benefit to Homeowners
Homeowners could potentially benefit from a significant reduction in their yearly assessment, which could lower their annual tax bill. If property taxes are escrowed into their monthly mortgage payment, this reduction could help keep their monthly costs more manageable.
Opting Out: Process and Requirements
School districts will have the option to opt out of the statewide homestead exemption, but they must act quickly. The opt-out process can only begin after January 1, 2025, and must be completed by March 1, 2025.
To opt out, a school district must:
Opt out resolution by The Dekalb County governing authority.
Advertise the intent to opt out, including posting on the district’s website and issuing a press release.
Three public hearings are held, DeKalb County is holding 3 public hearings this week.
Resolution must be filed with the Georgia Secretary of State’s office by March 1, 2025.
Key Takeaway
The statewide local homestead exemption could reshape school district funding by limiting taxable property value growth. The DeKalb County governing authority will need to decide whether to accept the exemption’s revenue impact or opt out before the March 1, 2025, deadline. They are holding 3 public hearings this week. If not opted out, school districts would take proactive steps now to prepare for a possible shift in their funding structure. Homeowners will experience both positive and negative impacts, regardless of the outcome.