Reform NC Property Tax.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1092

Short Title: Reform NC Property Tax. (Public)
Sponsors: Representatives Ager, Longest, Buansi, and Johnson-Hostler (Primary
Sponsors).
For a complete list of sponsors, refer to the North Carolina General Assembly web site.
Referred to: Rules, Calendar, and Operations of the House
April 30, 2026
*H1092-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO AMEND THE CONSTITUTION OF NORT H CAROLINA TO ALLOW 2
PROPERTY TAX EXEMPTI ONS BASED UPON AREA MEDIAN INCOME; TO 3
MODIFY THE PROPERTY TAX HOMESTEAD CIRCUI T BREAKER; TO UPDATE 4
AND MODIFY THE NONPR OFIT LOW - OR MODERAT E-INCOME HOUSING 5
PROPERTY TAX EXEMPTI ON; AND TO PROVIDE G RANT FUNDING TO THE 6
NORTH CAROLINA ASSOC IATION OF COUNTY COM MISSIONERS TO SUPPOR T 7
MORE FREQUENT PROPERTY REAPPRAISALS. 8
The General Assembly of North Carolina enacts: 9
10
AREA MEDIAN INCOME CONSTITUTIONAL AMENDMENT 11
SECTION 1.(a) Section 2 of Article V of the North Carolina Constitution reads as 12
rewritten: 13
"Sec. 2. State and local taxation. 14
… 15
(3) Exemptions. Property belonging to the State, counties, and municipal corporations 16
shall be exempt from taxation. The General Assembly may exempt cemeteries and property held 17
for educational, scientific, literary, cultural, charitable, or religious purposes, and, to a value not 18
exceeding $300, any personal property. The General Assembly may exempt from taxation not 19
exceeding $1,000 in value of property held and used as the place of residence of the owner. Every 20
exemption shall be on a State-wide basis and shall be made by general law uniformly applicable 21
in every county, city and town, and other unit of local governme nt. No taxing authority other 22
than the General Assembly may grant exemptions, and the General Assembly shall not delegate 23
the powers accorded to it by this subsection. The General Assembly may use area median income 24
as a criterion for affording property ta x relief on a statewide basis by a general law uniformly 25
applicable in every county, city and town, and other unit of local government. 26
…." 27
SECTION 1.(b) The amendment set out in subsection (a) of this section shall be 28
submitted to the qualified voters of the State at a statewide general election to be held on 29
November 3, 2026, which election shall be conducted under the laws then governing elections in 30
the State. The question to be used in the voting systems and ballots shall be: 31
"[ ] FOR [ ] AGAINST 32
Constitutional amendment to allow the General Assembly to use area median income 33
as a criterion for affording property tax relief on a statewide basis." 34
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1092-First Edition
SECTION 1.(c) The State Board of Elections shall certify the results of the 1
referendum conducted under sub section (b) of this section. If a majority of votes cast on the 2
question are in favor of the amendment set out in subsection (a) of this section, the Secretary of 3
State shall enroll the amendment among the permanent records of that office. If a majority of 4
votes cast on the question are against the amendment set out in subsection (a) of this section, the 5
amendment shall have no effect. 6
SECTION 1.(d) If the certification from the State Board of Elections under 7
subsection (c) of this section reflects that a majority of votes cast on the question are in favor of 8
the amendment set out in subsection (a) of this section, the amendment set out in subsection (a) 9
of this section is effective upon certification. 10
11
PROPERTY TAX HOMESTEAD CIRCUIT BREAKER MODIFICATIONS 12
SECTION 2. G.S. 105-277.1B reads as rewritten: 13
"§ 105-277.1B. Property tax homestead circuit breaker. 14
(a) Classification. – A permanent residence owned and occupied by a qualifying owner 15
is designated a special class of property under Article V, Section 2(2) of the North Carolina 16
Constitution and is taxable in accordance with this section. 17
(b) Definitions. – The definitions provided in G.S. 105-277.1 apply to this section. 18
(c) Income Eligibility Limit. – The income eligibility limit provided in G.S. 19
105-277.1(a2) applies to this section. is equal to (i) one hundred percent (100%) of the area 20
median income of the county in which the permanent residence is located for a non -married 21
qualifying owner and (ii) one hundred fifteen percent (115%) of the area media n income of the 22
county in which the permanent residence is located for a married qualifying owner. 23
(d) Qualifying Owner. – For the purpose of qualifying for the property tax homestead 24
circuit breaker under this section, a qualifying owner is an owner who meets all of the following 25
requirements as of January 1 preceding the taxable year for which the benefit is claimed: 26
(1) The owner has an income for the preceding calendar year of not more than 27
one hundred fifty percent (150%) of the income eligibility limi t specified in 28
subsection (c) of this section. 29
(2) The owner has owned the property as a permanent residence for at least five 30
consecutive years and has occupied the property as a permanent residence for 31
at least five years. 32
(3) The owner is at least 65 years of age or totally and permanently disabled. 33
(4) The owner is a North Carolina resident. 34
(e) Multiple Owners. – A permanent residence owned and occupied by husband and wife 35
is entitled to the full benefit of the property tax homestead circuit breaker notwithstanding that 36
only one of them meets the length of occupancy and ownership requirements and the age or 37
disability requirement of this section. When a permanent residence is owned and occupied by 38
two or more persons other than husband and wife, no pr operty tax homestead circuit breaker is 39
allowed unless all of the owners qualify and elect to defer taxes under this section. 40
(f) Tax Limitation. – A qualifying owner may defer the portion a proportional amount of 41
the principal amount of tax that is imposed for the current tax year on his or her permanent 42
residence and exceeds the percentage of the qualifying owner's income set out in the table in this 43
subsection. If a permanent residence is subject to tax by mor e than one taxing unit and the total 44
tax liability exceeds the tax limit imposed by this section, then both the taxes due under this 45
section and the taxes deferred under this section must be apportioned among the taxing units 46
based upon the ratio each taxing unit's tax rate bears to the total tax rate of all units. 47
Income Over Income Up To Percentage 48
-0- Income Eligibility Limit 4.0% 49
General Assembly Of North Carolina Session 2025
House Bill 1092-First Edition Page 3
Income Eligibility Limit 150% of Income Eligibility Limit5.0%that is equal to the 1
proportional amount of the homestead 's appraised value that does not exceed the county 2
median appraised value of the owner-occupied residential property. 3
(g) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of 4
this circuit breaker because of a temporary absence fro m his or her permanent residence for 5
reasons of health, or because of an extended absence while confined to a rest home or nursing 6
home, so long as the residence is unoccupied or occupied by the owner's spouse or other 7
dependent. 8
(h) Deferred Taxes. – The difference between the taxes due under this section and the 9
taxes that would have been payable in the absence of this section are a lien on the real property 10
of the taxpayer as provided in G.S. 105-355(a). G.S. 105-355(a); pr ovided, however, liens 11
remaining after (i) a qualifying owner 's death or (ii) the devise of the property to a member of 12
the owner's family, as defined in subdivision (i)(1) of this section, shall be deemed satisfied and 13
no deferred taxes shall be due thereon. The difference in t axes must be carried forward in the 14
records of each taxing unit as deferred taxes. The deferred taxes for the preceding three fiscal 15
years are due and payable in accordance with G.S. 105-277.1F when the property loses its 16
eligibility for deferral as a resu lt of a disqualifying event described in subsection (i) of this 17
section. On or before September 1 of each year, the collector must send to the mailing address of 18
a residence on which taxes have been deferred a notice stating the amount of deferred taxes an d 19
interest that would be due and payable upon the occurrence of a disqualifying event. 20
(i) Disqualifying Events. – Each of the following constitutes a disqualifying event: 21
(1) The owner transfers the residence. Transfer of the residence is not a 22
disqualifying event if (i) the owner transfers the residence to a co -owner of 23
the residence or, as part of a divorce proceeding, to his or her spouse and (ii) 24
that individual occupies or continues to occupy the property as his or her 25
permanent residence.residence or (ii) the owner transfers the residence to a 26
member of the owner 's family and th e person to whom the residence was 27
transferred satisfies the income eligibility limit provided by this section. For 28
purposes of this subdivision, "family" means the owner 's, or the owner 's 29
spouse's lineal descendant, lineal ascendant, or sibling, and the spouse of any 30
of these individuals. 31
(2) The owner dies. Death of the owner is not a disqualifying event if (i) the 32
owner's share passes to a co-owner of the residence or to his or her spouse and 33
(ii) that individual occupies or continues to occupy the property as his or her 34
permanent residence. 35
(3) The owner ceases to use the property as a permanent residence. 36
…." 37
38
NONPROFIT OWNERSHIP REQUIREMENTS FOR PROPERTY TAX EXEMPTION 39
SECTION 3.(a) G.S. 105-278.6 reads as rewritten: 40
"§ 105-278.6. Real and personal property used for charitable purposes.purposes by certain 41
entities. 42
(a) Real and personal property owned by:by an entity listed in this subsection is exempt 43
from taxation if (i) as to real property, it is actually and exclusively occupied and used, and as to 44
personal property, it is entirely and completely used, by the owner for a charitable purpose; and 45
(ii) the owner is not organized or operated for profit. The entities are: 46
(1) A Young Men's Christian Association or similar organization;organization. 47
(2) A home for the aged, sick, or infirm;infirm. 48
(3) An orphanage or similar home;home. 49
(4) A Society for the Prevention of Cruelty to Animals;Animals. 50
(5) A reformatory or correctional institution;institution. 51
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(6) A monastery, convent, or nunnery;nunnery. 1
(7) A nonprofit, life-saving, first aid, or rescue squad organization;organization. 2
(8) A nonprofit organization providing housing for individuals or famil ies with 3
low or moderate incomesincomes, other than rental housing, which is subject 4
to G.S. 105-278.7A. 5
shall be exempted from taxation if: (i) As to real property, it is actually and exclusively occupied 6
and used, and as to personal property, it is entirely and completely used, by the owner for 7
charitable purposes; and (ii) the owner is not organized or operated for profit. 8
(b) A charitable purpose within the meaning of this section is one that has humane and 9
philanthropic objectives; it is an activity that benefits humanity or a significant rather than limited 10
segment of the community without expectation of pecuniary profit or reward. The humane 11
treatment of animals is also a charitable purpose. 12
(c) The fact that a building or facility is incidentall y available to and patronized by the 13
general public, so long as there is no material amount of business or patronage with the general 14
public, shall does not defeat the exemption granted by this section. 15
(d) Notwithstanding the exclusive-use exclusive use requirements of this section, if part 16
of a property that otherwise meets the section's requirements is used for a purpose that would 17
require exemption under subsection (a), above, if the entire property were so used, the valuation 18
of the part so used shall be exempted is exempt from taxation. 19
(e) Real property held by an organization described in subdivision (a)(8) for a charitable 20
purpose under this section as a future site for housing housing, ot her than affordable rental 21
housing as defined in G.S. 105-278.7A, for individuals or families with low or moderate incomes 22
may be classified under this section for no more than 10 five years. The taxes that would 23
otherwise be due on real property exempt under this subsection shall be are a lien on the property 24
as provided in G.S. 105-355(a). The taxes shall be are carried forward in the records of the taxing 25
unit as deferred taxes. The deferred taxes are due and payable in accordance with 26
G.S. 105-277.1F when the property loses its eligibility for deferral as a re sult of a disqualifying 27
event. A disqualifying event occurs when the property was is not used for low - or 28
moderate-income housing within 10 five years from the first day of the fiscal year the property 29
was classified under this subsection. In addition to t he provisions in G.S. 105-277.1F, all liens 30
arising under this subdivision are extinguished when the property is used for low - or 31
moderate-income housing within the time period allowed under this subsection." 32
SECTION 3.(b) Article 12 of Chapter 105 of the General Statutes is amended by 33
adding the following new section to read: 34
"§ 105-278.7A. Real and personal property owned, in whole or in part, by a charitable 35
nonprofit and used for affordable rental housing. 36
(a) Exemption Generally. – Real and personal property owned by an eligible owner and 37
used for a charitable purpose in the operation of affordable rental housing is exempt from taxation 38
to the extent provided in this section if the requirements of this section are met. 39
(b) Definitions. –The following definitions apply in this section: 40
(1) Affiliate. – Defined in G.S. 105-130.2. 41
(2) Affordable rental housing. – A rental housing development consisting of land 42
and improvements in which more than fifty percent (50%) of the units are 43
qualifying units. 44
(3) Charitable purpose. – A charitable purpose within the meaning of this section 45
is one that has humane and philanthropic objectives; it is an activity that 46
benefits humanity or a significant rather t han limited segment of the 47
community without expectation of pecuniary profit or reward. 48
(4) Eligible joint venture. – A limited partnership, limited liability company, or 49
limited liability partnership in which a general partner or limited liability 50
company managing member is an eligible nonprofit corporation. 51
General Assembly Of North Carolina Session 2025
House Bill 1092-First Edition Page 5
(5) Eligible nonprofit corporation. – A nonprofit described in 501(c) (3) of the 1
Code that (i) is exempt from federal income taxation under section 501(a) of 2
the Code, (ii) is incorporated under a certificate of existence or admitted under 3
a certificate of authority under the North Carolina Nonprofit Corporation Act 4
as provided in Chapter 55A of the General Statutes , and (iii) has day-to-day 5
control of the operations of and decisions for the affordable rental housing and 6
has not delegated any decision -making authority other than to a property 7
manager serving under the direction of the eligible owner . The term includes 8
a single-purpose entity wholly owned by an eligible nonprofit corporation. 9
(6) Eligible owner. – An eligible joint venture or an eligible nonprofit corporation. 10
(7) Income limit. – Eighty percent (80%) of area median income, adjusted for 11
family size, as set and most recently published by the U.S. Department of 12
Housing and Urban Development. 13
(8) Qualifying unit. – An affordable rental housing unit for which both of the 14
following conditions are met: 15
a. The rent charged for an occupied unit or the published rent for a vacant 16
unit is at or below the rent limit. 17
b. It is occupied by, or set aside for, a tenant whose income is at or below 18
the income limit. 19
(9) Rent limit. – Rent, plus a utility allowance calculated in accordance with the 20
requirements of the North Carolina Housing Finance Agency , that does not 21
exceed thirty percent (30%) of the income limit. 22
(c) Requirements for Government -Supported Affordable Rental Housing. – Real and 23
personal property that provides government-supported affordable rental housing is exempt from 24
property taxation in any year in which all of the conditions listed in this subsection are met. For 25
purposes of this subsection, the term "government-supported" means that the property is financed 26
as described in sub-subdivision a. or b. of subdivision (2) of this subsection. The conditions are: 27
(1) The property is owned and operated by an eligible nonprofit corporation or an 28
eligible joint venture. 29
(2) Either of the following applies: 30
a. The eli gible owner is an eligible joint venture that receives 31
low-income housing credits pursuant to section 42 of the Code and 32
that is in compliance with any applicable regulatory requirements as 33
determined by the North Carolina Housing Finance Agency . 34
Ownership is determined as of the date the certificate of occupancy is 35
issued. 36
b. The eligible owner finances the acquisition, rehabilitation, 37
development, or operation of the property, or any combination thereof, 38
with tax-exempt mortgage revenue bonds , qualified 501(c)(3) bonds, 39
federal direct loans or grants, State loans or grants, or loans or grants 40
provided by a local jurisdiction in which the property is located. Such 41
government support must require the execution of a deed restriction or 42
enforceable, verifiable agreement with a public agency requiring that 43
the property be operated as affordable rental housing in accordance 44
with this section for a period of at least 15 years from the date the 45
financing or financial assistance was initially provided . Government 46
support does not include payments made to the owner under the federal 47
Housing Choice Voucher Program or other local, State, or federal 48
voucher program. 49
(d) Requirements for Non -Government-Supported Affordable Rental Housing. – Real 50
and personal property that provides non-government-supported affordable rental housing is 51
General Assembly Of North Carolina Session 2025
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exempt from property taxation in any year in which all of the conditions listed in this subsection 1
are met. For purposes of this subsection, the term "non-government-supported" means that the 2
property is not financed as described in sub-subdivision a. or b. of subdivision (2) of subsection 3
(c) of this section. The conditions are: 4
(1) The property is one hundred percent (100%) owned and operated by an 5
eligible nonprofit corporation that has owned and operated affordable rental 6
housing for at least five years. 7
(2) The eligible nonprofit corporation, including any of its subsidiaries or 8
nonprofit affiliates, does not receive any funding or financial assistance, other 9
than grants, from a for-profit affiliate. 10
(3) The eligible nonprofit corporation does not lease the affordable rental housing 11
land or improvements to another entity. This subdivision does not apply to the 12
leasing of affordable rental housing units to tenants. 13
(4) The eligible nonprofit corporation has executed a deed restriction in favor of 14
the county and any municipality in which the property is located requiring that 15
the property be operated as affordable rental housing in accordance with this 16
section for a period of at least 15 years from the date o f application. The 17
restriction must require that the owner provide the reporting required under 18
subsection (g) of this section annually to all grantees for the term of the deed 19
restriction. The deed restriction must state that any grantee, or its assigns, has 20
the right to enforce the terms of the restriction. 21
(e) Exemption Amount. – The exemption amount is the percentage of the appraised value 22
that is equal to the percentage of qualifying units unless the eligible owner meets the requirements 23
of the safe harbor in Section 3 of Internal Revenue Service Rev. Proc. 96-32, in which case the 24
exemption amount is one hu ndred percent (100%) of the appraised value of the property . A 25
transition period of one taxable year applies to improved and occupied rental housing property 26
purchased by an eligible owner for which the eligible owner cannot provide the total household 27
income for each qualifying unit at the time of application but that otherwise meets the 28
requirements of this section . During the transition period, a "qualifying unit" is an affordable 29
rental housing unit for which the rent charged is at or below the rent limit for purposes of 30
determining the exemption amount. 31
(f) Application. – To be eligible for an exemption under this section, an eligible owner 32
must submit an application in accordance with G.S. 105-282.1. The application form shall 33
require the applicant to provide the following information: 34
(1) Whether the applicant is applying for the exemption under subsection (c) or 35
subsection (d) of this section, along with documentation supporting that the 36
applicant is an eligible owner for the subsection under which it is applying; 37
evidence of government su pport pursuant to sub-subdivision a. or b. of 38
subdivision (2) of subsection (c) of this section , if applicable; and a copy of 39
the applicable deed restriction or regulatory agreement. 40
(2) Whether the property is subject to a tran sition period as described i n 41
subsection (e) of this section. 42
(3) Either of the following , as of last day of the month immediately preceding 43
January 1 of the year of application: 44
a. If the applicant is applying for an exemption amount based on the 45
percentage of qualifying units , the percentage of qualifying units by 46
providing the following items: 47
1. The rent amount received by the owner for each qualifying unit 48
as evidenced by an anonymized rent roll. The applicant must 49
provide evidence of the published rent if a unit is vacant. 50
General Assembly Of North Carolina Session 2025
House Bill 1092-First Edition Page 7
2. The total household income for each occupied qualifying unit, 1
except during the transition period, evidenced in an 2
anonymized manner. 3
b. If the applicant is applying for an exemption amount based on meeting 4
the requirements of the safe harbor in Section 3 of Internal Revenue 5
Service Rev. Proc. 96 -32, evidence demonstrating the affordable 6
rental housing meets those requirements. 7
(4) Certification t hat the applicant is in compliance with any app licable deed 8
restriction or regulatory agreement and the requirements of this section. 9
(g) Compliance. – An eligible owner that has been granted an exemption under this 10
section must, on an annual basis by January 31 following the initial exemption , certify that it 11
remains in compliance with this section and provide to the taxing u nit the items listed in 12
subdivision (3) of subsection (f) of this section, as of the previous December 31, including any 13
supporting documentation required by the taxing unit. Failure to meet these requirements within 14
the time limits subjects the property to discovery under G.S. 105-312. For purposes of satisfying 15
this requirement, the household income provided for each qualifying unit must be verified every 16
two years following initial verification of the tenant's income. 17
(h) Future Site. – Real property held by an eligible owner as a future site for affordable 18
rental housing may be classified under this section for no more than five years. The taxes that 19
would otherwise be due on real property exempt under this subsection are a lien on the property 20
as provided in G.S. 105-355(a). The taxes shall be carried forward in the records of the taxing 21
unit as deferred taxes. The deferred taxes are due and payable in accordance with 22
G.S. 105-277.1F when the property loses its eligibility for deferral a s a result of a disqualifying 23
event. A disqualifying event occurs when the property is not used for affordable rental housing 24
that is in compliance with this section within five years from the first day of the fiscal year the 25
property was classified under this section. In addition to the provisions in G.S. 105-277.1F, all 26
liens arising under this subsection are extinguished when the property is used for affordable rental 27
housing within the time period allowed under this subsection. For purposes of this subs ection, 28
the term "future site " means unimproved real property or improved real property that is not 29
occupied as of the date of the application for exemption under this section. 30
(i) Ineligible Property. – Property that has b een designated a special class of property 31
under G.S. 105-277.16 and assessed accordingly is not eligible for exemption under this section." 32
SECTION 3.(c) G.S. 105-277.1F(a) reads as rewritten: 33
"(a) Scope. – This section applies to the following deferred tax programs: 34
(1) G.S. 105-275(12), real property owned by a nonprofit corporation held as a 35
protected natural area. 36
(1a) G.S. 105-275(29a), historic district property held as future site of historic 37
structure. 38
(2) G.S. 105-277.1B, the property tax homestead circuit breaker. 39
(2a) (See note for repeal) G.S. 105-277.1D, the inventory property tax deferral. 40
(3) G.S. 105-277.4(c), present-use value property. 41
(4) G.S. 105-277.14, working waterfront property. 42
(4a) G.S. 105-277.15, wildlife conservation land. 43
(4b) G.S. 105-277.15A, site infrastructure land. 44
(5) G.S. 105-278(b), historic property. 45
(6) G.S. 105-278.6(e), nonprofit property held as future site of low - or 46
moderate-income housing.housing, other than affordable rental housing as 47
defined under G.S. 105-278.7A. 48
(7) G.S. 105-278.7A(h), nonprofit property held as future site of affordable rental 49
housing." 50
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SECTION 3.(d) This section is effective for taxes imposed for taxable years 1
beginning on or after July 1, 2026, and, with respect to property held as a future site u nder 2
G.S. 105-278.6(e) or G.S. 105-278.7A(h), as enacted by this act, applies to real property 3
classified under those provisions on or after that date. Notwithstanding G.S. 105-282.1(a)(2)a., 4
an owner of low - or moderate -income rental housing property that is exempt under 5
G.S. 105-278.6(a)(8) as of the effective date of this act must, by December 31, 2026, reapply for 6
the exemption, providing the assessor of the taxing unit with any necessary documentation for 7
compliance consistent with this act. Reapplication under this section is considered an application 8
under subsection (f) of G.S. 105-278.7A, as enacted by this act. Failure to meet this requirement 9
within the time limit subjects the property to discovery under G.S. 105-312. 10
11
NCACC GRANT FUNDING FOR REAPPRAISAL TECHNOLOGY 12
SECTION 4.(a) There is appropriated from the General Fund to the North Carolina 13
Association of County Commissioners (Association) the nonrecurring sum of twenty million 14
dollars ($20,000,000) for the 2026 -2027 fiscal year to be used by t he Association to provide 15
grants to local governments for the purpose of transitioning those governments to shortened 16
reappraisal cycles and thereby ensure more frequent and accurate property valuations. Grant 17
funds provided under this section shall be used by local governments for (i) technical assistance 18
and (ii) one-time capital investments in technological infrastructure that improve local capacity 19
and efficiency in conducting reappraisals, including the acquisition of specialized software, data 20
migration, and the implementation of digital systems. In awarding grants under this section, the 21
Association shall prioritize awarding grants to local governments operating on a reappraisal cycle 22
of more than four years. For purposes of this section, "local governments" means counties, cities, 23
or towns conducting reappraisals of property under Subchapter II of Chapter 105 of the General 24
Statutes as of the effective date of this section. 25
SECTION 4.(b) This section becomes effective July 1, 2026. 26
27
EFFECTIVE DATE 28
SECTION 5. Section 2 of this act becomes effective for taxable years beginning on 29
or after July 1, 2027, only if the constitutional amendment proposed by Section 1 of this act is 30
approved; otherwise, Section 2 of this act shall have no effect . Unless otherw ise provided, the 31
remainder of this act is effective when it becomes law. 32