HB167 • 2026

Relating to Property Tax; amending the cap on the assessed value of real property

Taxes

Passed Legislature

This bill passed both chambers and reached final enrollment, even if later executive action is not shown here.

Sponsor: Kiel
Last action: 2026-01-13
Official status: Pending Committee Action in House of Origin
Effective date: Not listed

Plain English Breakdown

The bill text contains contradictory phrasing in subsections (b)(1) and (b)(2), listing both 'seven percent' and the CPI increase without clear syntax on which controls.

HB167: Changing the Limit on Property Tax Value Increases

This bill changes how much a property's tax value can rise each year by linking it to inflation instead of using a fixed seven percent limit.

What This Bill Does

Changes the cap on yearly increases in assessed real property values from a fixed seven percent to the percentage increase in the Consumer Price Index (CPI).
Requires tax assessors to compare current year property values with prior year values after county-wide reappraisals.
Exempts new construction, additions, and improvements from this limit so their full value can be taxed immediately.
Removes the cap for properties that change ownership, except for transfers between family members or those caused by foreclosure redemption.

Who It Names or Affects

Owners of Class II and Class III real properties in Alabama.
County tax assessors who calculate property values for taxes.
Homeowners whose properties are transferred to family members or redeemed after foreclosure.

Terms To Know

Assessed Value: The value assigned to a piece of real estate by the government to calculate property taxes.
Consumer Price Index (CPI): A measure published by the U.S. Department of Labor that tracks changes in prices for goods and services, often used as an inflation rate.
Class II and Class III Properties: Specific categories of real property defined in Alabama law (Section 40-8-1) to which this tax cap applies.

Limits and Unknowns

The bill text contains conflicting or unclear phrasing regarding whether the limit is seven percent, the CPI rate, or a combination of both.
The specific definition of 'Class II' and 'Class III' properties requires looking up Section 40-8-1 in Alabama law to understand exactly which buildings are included.

Bill History

2026-01-13 House
Pending Committee Action in House of Origin
2026-01-13 House
Read for the first time and referred to the House Committee on Ways and Means General Fund

Official Summary Text

Relating to Property Tax; amending the cap on the assessed value of real property

Current Bill Text

Read the full stored bill text

HB167 INTRODUCED
Page 0
HB167
AR88R7Q-1
By Representative Kiel
RFD: Ways and Means General Fund
First Read: 13-Jan-26
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AR88R7Q-1 01/01/2026 RA (F)RA 2025-3765
Page 1
First Read: 13-Jan-26
SYNOPSIS:
Under existing law there is a seven percent cap
on increases in the assessed value of real property.
This bill would change the cap on increases in
the assessed value of real property.
A BILL
TO BE ENTITLED
AN ACT
Relating to property taxes; to amend Act 2023-344, 2024
Regular Session, now appearing as Section 40-7-2.2, Code of
Alabama 1975, to change the cap on real property tax
assessments; and to provide for retroactive effect.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. Act 2024-344, Regular Session 2024, now
appearing as Section 40-7-2.2, Code of Alabama 1975 is amended
to read as follows:
"§40-7-2.2
(a) After each county-wide reappraisal, as provided by
Article 2, and the resulting assessed value of property for ad
valorem tax purposes, the tax assessor shall annually compare
the assessed value of each real property reappraised or
reassessed to the prior year's assessed value. If the assessed
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HB167 INTRODUCED
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reassessed to the prior year's assessed value. If the assessed
value of the property increased, the tax assessor shall adjust
the assessed value of the property pursuant to this section.
(b)(1) The percentage increase in the assessed value of
Class III properties, as defined in Section 40-8-1, from the
previous year's assessed value, shall be limited to not more
than a seven percent the percentage increase in the Consumer
Price Index for all urban consumers as published by the U.S.
Department of Labor, Bureau of Labor Statistics for the
immediately preceding year. increase in the assessed value of
the property from the previous year's assessed value.
(2) The percentage increase in the assessed value of
Class II properties, as defined in Section 40-8-1, from the
previous year's assessed value, shall be limited to not more
than a seven percent increase the percentage increase in the
Consumer Price Index for all urban consumers as published by
the U.S. Department of Labor, Bureau of Labor Statistics for
the immediately preceding year. in the assessed value of the
property from the previous year's assessed value.
(c) The limitations provided for in subsection (b)
shall not apply to the following :
(1) Real property that has never been assessed.
(2) Additions or improvements to real property,
including new construction. This subdivision shall not include
repairs to or ordinary maintenance of an existing structure or
the grounds of the property.
(3) Change to the classification of the property.
(4) Change in ownership of the property, except for any
of the following:
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HB167 INTRODUCED
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of the following:
a. Transfers between spouse or family members for no or
nominal consideration, including upon death of owner.
b. Transfers due to redemption after foreclosure of a
mortgage, tax sale, or tax lien.
(5) Property located in a tax increment district
created pursuant to Chapter 99 of Title 11.
(d) The limitations provided for in subsection (b)
shall be effective October 1, 2024, and shall continue through
the fiscal year beginning October 1, 2027.
Section 2. This act shall become effective on October
1, 2026, and shall apply retroactively to October 1, 2024.
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