Summary:

 House Bill 342 (HB 342) amends and enacts provisions of the Property Tax Code by modifying valuation limits for residential and nonresidential property, requiring affidavits for certain property transfers, and updating property tax exemptions for veterans in accordance with constitutional amendments approved in the November 2024 general election. The bill also adjusts the compensation of county valuation protests board members, imposes administrative penalties for failing to report property transfers, and eliminates the requirement to mail certain residential classification forms. HB 342 declares an emergency and takes effect immediately upon passage and approval. 

Legislation Overview:

 House Bill 342 (HB 342) establishes a limitation on increases in residential property valuation while providing exemptions for solar energy installations and reconstruction following a declared disaster. It introduces a temporary limitation on the valuation of nonresidential property from 2025 through 2037, capping annual increases at 12% unless there is a change in zoning, use, or significant improvements. The bill modifies property tax exemptions for veterans by increasing the exemption amount from $4,000 to $10,000 in 2025, with inflation adjustments beginning in 2026. It allows disabled veterans to claim an exemption proportional to their level of disability rather than requiring full disability.

HB 342 mandates that an affidavit be filed with the county assessor for certain property transfers while exempting transactions such as family transfers, court-ordered conveyances, and certain trusts. A new administrative penalty of up to $1,000 is imposed for failure to timely file required affidavits. The bill increases compensation for county valuation protests board members from $80 per day to $400 per day and provides for future inflation adjustments. It removes the requirement that notices declaring a property as residential be mailed to property owners and updates reporting and classification requirements for property valuation notices. The bill declares an emergency, meaning it takes effect immediately upon passage.

Implications

HB 342 affects property tax revenue by limiting annual valuation increases, which may reduce property tax growth for residential and nonresidential properties. The valuation cap for nonresidential properties may impact local government revenue collection, particularly in areas with significant commercial development. The increase in veteran exemptions and changes to the disabled veteran exemption may reduce taxable property values, decreasing overall tax revenue for counties and municipalities.

Administrative costs will likely increase due to the requirement for county assessors to process affidavits for property transfers and enforce penalties for noncompliance. The new requirement for property owners to report zoning and use changes places an additional burden on property taxpayers and may require enhanced oversight by assessors. The substantial increase in compensation for county valuation protests board members will raise expenses for the Property Tax Division, though future inflation adjustments ensure predictable cost increases over time. The bill’s emergency clause accelerates its implementation, requiring immediate adjustments to tax administration processes. 

Current Law:

 Under current law, residential property valuation increases are capped at 3% annually, except when ownership changes, use changes, or new improvements are added. Nonresidential properties are not currently subject to an annual valuation cap. The veteran exemption is fixed at $4,000 and does not adjust for inflation. Disabled veterans are eligible for a full property tax exemption only if they have a 100% service-connected disability. Current law requires an affidavit for residential property transfers but does not impose penalties for noncompliance. County valuation protests board members are compensated at $80 per day, with no automatic inflation adjustments. Residential classification forms are required to be mailed to property owners. HB 342 introduces valuation caps for nonresidential properties, increases exemptions, establishes penalties for unreported property transfers, removes mailing requirements, and raises board member compensation.