HB77 • 2026

Taxation and Revenue; disabled veterans' homestead taxes inclusion in debt-to-income ratio under certain circumstances prohibited

Taxes

Enacted

This bill passed the Legislature and reached final enactment based on the latest official action.

Sponsor: Paschal
Last action: 2026-03-17
Official status: Enacted
Effective date: 2026-10-01

Plain English Breakdown

The source specifies the certificate becomes valid upon purchase of 'a homestead', but does not explicitly limit this to only one home per veteran lifetime.

Disabled Veterans Property Tax Debt-To-Income Ratio Exemption Act

This law allows certain disabled veterans to get a temporary certificate so that home property taxes are not counted when lenders check if they can afford a mortgage.

What This Bill Does

Requires tax assessing officials to issue a tentative exemption certificate to eligible veterans before they buy their first home.
Prohibits settlement agents and loan closing officers from counting homestead ad valorem taxes in the debt-to-income ratio for these veterans upon receiving the certificate.
States that the temporary certificate becomes permanent once the veteran purchases the home.
Sets a 20-day limit for tax officials to issue the certificate after receiving all required documents.

Who It Names or Affects

Veterans with a 100 percent disability rating from the U.S. Department of Veterans Affairs who qualify for permanent ad valorem homestead exemptions
Tax assessing officials who must review applications and issue certificates
Settlement agents and loan closing officers handling mortgage paperwork

Terms To Know

Debt-to-income ratio: A number lenders use to compare a borrower's monthly debt payments to their income.
Ad valorem taxes: Property taxes based on the value of the home or land.
Tentative certificate: A temporary document issued to a veteran proving they qualify for tax exemptions before they officially own the home, which becomes permanent upon purchase.

Limits and Unknowns

The law only applies to veterans with a specific 100 percent disability rating who also qualify under existing state exemption laws.
Veterans must provide an affidavit on a Department of Revenue form, the home purchase agreement, and official VA documentation showing their disability status.
This act takes effect on October 1, 2026.

Bill History

2026-03-17 House
Enacted
2026-03-10 Senate
Motion to Read a Third Time and Pass - Adopted Roll Call 765 (Yeas 35, Nays 0)
2026-03-10 Senate
Third Reading in Second House (Yeas 35, Nays 0)
2026-03-10 Senate
Signature Requested
2026-03-10 House
Enrolled
2026-03-10 House
Ready to Enroll
2026-02-05 Senate
Read for the Second Time and placed on the Calendar
2026-02-04 Senate
Reported Out of Committee Second House
2026-01-20 House
Motion to Read a Third Time and Pass - Adopted Roll Call 68 (Yeas 101, Nays 1)
2026-01-20 House
Third Reading in House of Origin (Yeas 99, Nays 0)
2026-01-20 Senate
Pending Committee Action in Second House
2026-01-20 Senate
Read for the first time and referred to the Senate Committee on Finance and Taxation General Fund
2026-01-14 House
Read for the Second Time and placed on the Calendar
2026-01-14 House
Reported Out of Committee House of Origin
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 Military and Veterans' Affairs

Official Summary Text

This act is the Disabled Veterans Property Tax Debt-To-Income Ratio Exemption Act. This act: (1) requires tax assessing officials to issue a tentative certificate of exemption from ad valorem taxation for a homestead to veterans with a 100 percent disability rating and who qualify for a permanent ad valorem homestead exemption due to disability upon the veteran providing certain information; (2) prohibits settlement agents from considering homestead ad valorem taxes in determining a borrower's debt-to-income ratio upon receiving a tentative certificate; and (3) provides that a tentative certificate of exemption becomes permanent upon a veteran purchasing a homestead.

Current Bill Text

Read the full stored bill text

HB77 ENROLLED
Page 0
HB77
ARHR4Q7-2
By Representatives Paschal, Fidler, Starnes, Stubbs, Smith,
Brown, Wadsworth, Whorton, Fincher, Bolton, Rehm, Lamb,
Givens, Underwood
RFD: Military and Veterans' Affairs
First Read: 13-Jan-26
PFD: 02-Dec-25
1
2
3
4
5
6
7
8
HB77 Enrolled
Page 1
PFD: 02-Dec-25
Enrolled, An Act,
Relating to the Department of Revenue; to provide for
certain disabled veterans to be issued tentative certificates
of exemption from homestead ad valorem taxes when applying for
home mortgage loans; and to prohibit settlement agents and
loan closing officers from considering homestead ad valorem
taxes when calculating the debt-to-income ratio of these
veterans upon receiving a certificate.
BE IT ENACTED BY THE LEGISLATURE OF ALABAMA:
Section 1. (a) This act shall be known and may be cited
as the Disabled Veterans Property Tax Debt-To-Income Ratio
Exemption Act.
(b) A tax assessing official shall issue a veteran who
has received a 100 percent disability rating from the United
States Department of Veterans Affairs and who may claim an
exemption under Section 40-9-19 or 40-9-21, Code of Alabama
1975, for permanent and total disability, a tentative
certificate of permanent and total disability prior to
purchasing a homestead upon receiving all of the following:
(1) An affidavit, on a form supplied by the Department
of Revenue, that includes all of the following information:
a. The name of the disabled veteran and the name of his
or her spouse, if applicable.
b. Whether the homestead will be jointly owned by the
disabled veteran and his or her spouse, if applicable.
c. An attestation by the veteran that the homestead is
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
HB77 Enrolled
Page 2
c. An attestation by the veteran that the homestead is
to be occupied as the veteran's principal place of residence.
(2) The purchase agreement for the homestead.
(3) Documentation from the United States Department of
Veterans Affairs, or its successor agency, indicating that the
veteran has a 100 percent service-connected, permanent, and
total disability.
(c) A tax assessing official shall issue a tentative
certificate of permanent and total disability within 20 days
of receiving all of the information required pursuant to
subsection (b).
(d) A tentative certificate of permanent and total
disability shall be considered a valid certificate of
permanent and total disability pursuant to Sections 40-9-19
and 40-9-21, Code of Alabama 1975, upon the purchase of a
homestead by a veteran.
(e) A settlement agent or loan closing officer may not
consider ad valorem taxes for a homestead when calculating the
debt-to-income ratio of a potential borrower who has provided
a tentative certificate of permanent and total disability to
the agent or officer.
(f) The Department of Revenue shall establish the form
of the tentative certificate of permanent and total disability
which shall include a section indicating that the disabled
veteran, with a 100 percent permanent and total disability
rating, is eligible for exemption from ad valorem taxes
pursuant to Section 40-9-19 or 40-9-21, Code of Alabama 1975,
on a homestead property.
Section 2. This act shall become effective on October
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
45
46
47
48
49
50
51
52
53
54
55
56
HB77 Enrolled
Page 3
Section 2. This act shall become effective on October
1, 2026.57
HB77 Enrolled
Page 4
1, 2026.
________________________________________________
Speaker of the House of Representatives
________________________________________________
President and Presiding Officer of the Senate
House of Representatives
I hereby certify that the within Act originated in and
was passed by the House 20-Jan-26.
John Treadwell
Clerk
Senate 10-Mar-26 Passed
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
76
77
78
79
80
81
82
83
84
85
86
87
88
89
90
91