Senior Property Tax Relief Modernization Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
H 1
HOUSE BILL 1179

Short Title: Senior Property Tax Relief Modernization Act. (Public)
Sponsors: Representatives Rubin, Ager, Cervania, and Carney (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
May 4, 2026
*H1179-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MODIFY THE ELDERLY OR DISABLED PROPERTY TAX HOMEST EAD 2
EXCLUSION, TO EXPAND THE PROPERTY TAX HOMESTEAD CIRCUIT BREAKER 3
AND TO REIMBURSE LOCAL GOVERNMENTS FOR THEIR RESULTING REVENUE 4
LOSS, AND TO PROVIDE GRANT FUNDING TO TH E NORTH CAROLINA 5
ASSOCIATION OF COUNT Y COMMISSIONERS TO S UPPORT MORE FREQUENT 6
PROPERTY TAX REAPPRAISALS. 7
Whereas, property taxes fund essential local services, including public schools, public 8
safety, and infrastructure; and 9
Whereas, rapidly rising home values have increased property tax burdens, particularly 10
for seniors and disabled homeowners living on fixed or limited incomes; and 11
Whereas, current property tax relief programs contain a sharp income cutoff that 12
denies all relief to homeowners just above the eligibility threshold, creating inequitable 13
outcomes; and 14
Whereas, modernizing the homestead exemption to provide a gradual, income-based 15
phaseout will expand access to relief while eliminating an unfair benefits "cliff"; and 16
Whereas, allowing eligible ho meowners to combine the homestead exemption with 17
the circuit breaker program will provide more complete and effective protection against 18
unaffordable tax burdens for people on fixed or limited incomes; and 19
Whereas, addressing barriers faced by residents wi th heirs' property or shared 20
ownership will ensure that relief reaches those who are responsible for maintaining and paying 21
for their homes; and 22
Whereas, reimbursing local governments for the cost of expanded relief will preserve 23
funding for essential local services; Now, therefore, 24
The General Assembly of North Carolina enacts: 25
SECTION 1.(a) G.S. 105-277.1 reads as rewritten: 26
"§ 105-277.1. Elderly or disabled property tax homestead exclusion. 27
(a) Exclusion. – A permanent residence owned and occupied by a qualifying owner is 28
designated a special class of property under Article V, Sec. 2(2) of the North Carolina 29
Constitution and is taxable in accordance with this section. The amount of the appraised value of 30
the residence equal to the exclusion amount is excluded from taxation. The exclusion amount is 31
the greater of twenty five thousand dollars ($25,000) or fifty percent (50%) of the appraised value 32
of the residence. An owner who receives an exclusion under this section may not receive other 33
property tax relief.Qualifying owners (i) with an income at or below fifty-five percent (55%) of 34
State median income shall receive the full exclusion amount of property tax relief provided under 35
General Assembly Of North Carolina Session 2025
Page 2 House Bill 1179-First Edition
this section, (ii) with an income between fifty -five percent (55%) and eighty percent (80%) of 1
State median income , the exclusion begins at one hundred percent (100%) of the exclusion 2
amount of property tax relief provided under this section, and is reduced by three and thirty-three 3
hundredths percent (3.33%) for every one percent (1%) of income above the fifty -five percent 4
(55%) threshold, and (iii) with an income at or above eighty percent (80%) of State median 5
income, no property tax relief is allowed under this section. 6
A qualifying owner is an owner who meets all of the following requirements as of January 1 7
preceding the taxable year for which the benefit is claimed: 8
(1) Is at least 65 years of age or totally and permanently disabled. 9
(2) Has an income for the preceding calendar year of not more than the income 10
eligibility limit.State median income. 11
(3) Is a North Carolina resident. 12
… 13
(a2) Income Eligibility Limit. – For the taxable year beginning on July 1, 2008, the income 14
eligibility limit is twenty-five thousand dollars ($25,000). For taxable years beginning on or after 15
July 1, 2009, the income eligibility limit is the amount for the preceding year, adjusted by the 16
same percentage of this amount as the percentage of any cost -of-living adjustment made to the 17
benefits under Titles II and XVI of the Social Security Act for the p receding calendar year, 18
rounded to the nearest one hundred dollars ($100.00). On or before July 1 of each year, the 19
Department of Revenue must determine the income eligibility amount to be in effect for the 20
taxable year beginning the following July 1 and m ust notify the assessor of each county of the 21
amount to be in effect for that taxable year. 22
(a3) Additional Relief. – An owner who receives an exclusion under this section may also 23
receive property tax relief under G.S. 105-277.1B provided that the owner meets the 24
requirements of that section. 25
… 26
(b) Definitions. – The following definitions apply in this section: 27
… 28
(3b) Resident senior. – A qualifying owner who (i) uses, as the owner 's primary 29
residence, the permanent residence that qualifies for the proper ty tax relief 30
provided by this section and (ii) can demonstrate primary, personal, and 31
sustained responsibility for the upkeep and continued maintenance of the 32
property. 33
(3c) State median income. – The most recent annual median household income for 34
the State as reported by the Un ited States Census Bureau in the American 35
Community Survey 1-Year Estimates 36
… 37
(e1) Resident Senior Carveout. – Notwithstanding any provision of this section to th e 38
contrary, a permanent residence owned and occupied by a resident senior is entitled to the full 39
property tax relief provided by this section notwithstanding th at the resident senior has a 40
proportional ownership interest in the property, provided that (i) no other non -spouse owner 41
permanently resides in the property with the resident senior and (ii) notice is provided to all other 42
co-owners of the property of the resident senior's election to defer under this subsection and no 43
co-owner objects thereto. If any co-owner objects to the resident senior receiving the full property 44
tax relief provided by this subsection, the proportional relief under subsection (e) of this section 45
shall apply to the primary residence." 46
SECTION 1.(b) G.S. 105-277.1B reads as rewritten: 47
"§ 105-277.1B. Property tax homestead circuit breaker. 48
(a) Classification. – A permanent residence owned and occupied by a qualifying owner 49
is designated a special class of property under Article V, Section 2(2) of the North Carolina 50
Constitution and is taxable in accordance with this section. 51
General Assembly Of North Carolina Session 2025
House Bill 1179-First Edition Page 3
(b) Definitions. – The definitions provided in G.S. 105-277.1 and the following 1
definitions apply to this section.section: 2
(1) Hold harmless amount. – The tax deferred under subsection (f) of this section. 3
(2) Resident senior. – A qualifying owner who (i) uses, as the owner 's primary 4
residence, the permanent residence tha t qualifies for the property tax relief 5
provided by this section and (ii) can demonstrate primary, personal, and 6
sustained responsibility for t he upkeep and continued maintenance of the 7
property. 8
(3) Total hold harmless amount. – The sum of the following: 9
a. The hold harmless amount for all permanent residences in the county. 10
b. The hold harmless amount for all permanent residences in ci ties 11
located within the county. 12
(c) Income Eligibility Limit. – The income eligibility limit provided in 13
G.S. 105-277.1(a2) applies to this section. For the taxable year beginning on July 1, 2008, the 14
income eligibility limit is twenty -five thousand dollars ($25 ,000). For taxable years beginning 15
on or after July 1, 2009, the income eligibility limit is the amount for the preceding year, adjusted 16
by the same percentage of this amount as the percentage of any cost -of-living adjustment made 17
to the benefits under Titles II and XVI of the Social Security Act for the preceding calendar year, 18
rounded to the nearest one hundred dollars ($100.00). On or before July 1 of each year, the 19
Department of Revenue must determine the income eligibility amount to be in effect for th e 20
taxable year beginning the following July 1 and must notify the assessor of each county of the 21
amount to be in effect for that taxable year. 22
(d) Qualifying Owner. – For the purpose of qualifying for the property tax homestead 23
circuit breaker under this section, a qualifying owner is an owner who meets all of the following 24
requirements as of January 1 preceding the taxable year for which the benefit is claimed: 25
(1) The owner has an income for the preceding calendar year of not more than 26
one hundred fifty p ercent (150%) of the income eligibility limit specified in 27
subsection (c) of this section. 28
(2) The owner has owned the property as a permanent residence for at least five 29
three consecutive years and has occupied the property as a permanent 30
residence for at least five three years. 31
(3) The owner is at least 65 years of age or totally and permanently disabled. 32
(4) The owner is a North Carolina resident. 33
(e) Multiple Owners. – A permanent residence owned and occupied by husband and wife 34
is entitled to the full benefit of the property tax homestead circuit breaker notwithstanding that 35
only one of them meets the length of occupancy and ownership requirements and the age or 36
disability requirement of this section. When Subject to subsection (e1) of this section, when a 37
permanent residence is owned and occupied by two or more persons other than husband and wife, 38
no the benefit of the property tax homestead circuit breaker is (i) allowed unless all of the owners 39
qualify and elect to defer taxes under this section. to each qualifying owner in the amount equal 40
to that owner 's proportional ownership interest in the property and (ii) not allowed to any 41
nonqualifying owner. Each owner shall be responsible for the property taxes attributable to the 42
owner's respective proportional ownership interest. Nothing in this subsection shall be construed 43
to (i) affect the obligation of any owner to pay property taxes as required by Subchapter II of this 44
Chapter or (ii) impair any owner's rights under G.S. 46A-27 or G.S. 105-363. 45
(e1) Resident Senior Carveout. – Notwithstanding any provision of this section to th e 46
contrary, a permanent residence owned and occupied by a resident senior is entitled to the full 47
property tax relief provided by this section notwithstanding th at the resident senior has a 48
proportional ownership interest in the property, provided that (i) no other non -spouse owner 49
permanently resides in the property with the resident senior and (ii) notice is provided to all other 50
co-owners of the property of the resident senior's election to defer under this subsection and no 51
General Assembly Of North Carolina Session 2025
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co-owner objects thereto. If any co-owner objects to the resident senior receiving the full property 1
tax relief provided by this subsection, the proportional relief under subsection (e) of this section 2
shall apply to the primary residence. 3
(f) Tax Limitation. – A qualifying owner may defer the portion of the principal amount 4
of tax that is imposed for the current tax year on his or her permanent residence and exceeds the 5
percentage of the qualifying owner's income set out in the table in this subsection. If a permanent 6
residence is subject to tax by more than one taxing unit and the total tax liability exceeds the tax 7
limit imposed by this section, then both the taxes due under this section and the taxes deferred 8
under this section must be apportioned among the taxing units based upon the ratio each taxing 9
unit's tax rate bears to the total tax rate of all units. 10
Income Over Income Up To Percentage 11
-0- Income Eligibility Limit 4.0% 12
Income Eligibility Limit 150% of Income Eligibility Limit 5.0% 13
(g) Temporary Absence. – An otherwise qualifying owner does not lose the benefit of 14
this circuit breaker because of a temporary absence from his or her permanent residence for 15
reasons of health, or because of an extended absence while confined to a rest home or nursing 16
home, so long as the residence is unoccupied or occupied by the owner's spouse or other 17
dependent. 18
(h) Deferred Taxes. – The difference between the taxes due under this section and the 19
taxes that would have been payable in the absence of this section are a lien on the real property 20
of the taxpayer as provided in G.S. 105-355(a). The difference in taxes must be carried forward 21
in the records of each taxing unit as deferred taxes. The deferred taxes for the preceding three 22
fiscal years are due and payable in accordance with G.S. 105-277.1F when the property loses its 23
eligibility for deferral as a result of a disqualifying event described in subsection (i) of this 24
section. On or before September 1 of each year, the collector must send to the mailing address of 25
a residence on which taxes have been deferred a notice stating the amount of deferred taxe s and 26
interest that would be due and payable upon the occurrence of a disqualifying event. 27
Notwithstanding any provision of law to the contrary, the interest rate on liens under this 28
subsection shall be the lesser of (i) the rate established in G.S. 105-360 or (ii) the yield on 10-Year 29
U.S. Treasury Notes as of the date the lien attaches. 30
(i) Disqualifying Events. – Each of the following constitutes a disqualifying event: 31
(1) The owner transfers the residence. Transfer of the residence is not a 32
disqualifying event if (i) the owner transfers the residence to a co -owner of 33
the residence or, as part of a divorce proceeding, to his or her spouse and (ii) 34
that individual occupies or continues to occupy the property as his or her 35
permanent residence. 36
(2) The owner dies. Death of the owner is not a disqualifying event if (i) the 37
owner's share passes to a co-owner of the residence or to his or her spouse and 38
(ii) that individual occupies or continues to occupy the property as his or her 39
permanent residence. 40
(3) The owner ceases to use the property as a permanent residence. 41
(j) Gap in Deferral. – If an owner of a residence on which taxes have been deferred under 42
this section is not eligible for continued deferral for a tax year, the deferred taxes are carried 43
forward a nd are not due and payable until a disqualifying event occurs. If the owner of the 44
residence qualifies for deferral after one or more years in which he or she did not qualify for 45
deferral and a disqualifying event occurs, the years in which the owner did n ot qualify are 46
disregarded in determining the preceding three years for which the deferred taxes are due and 47
payable. 48
(k) Repealed by Session Laws 2008-35, s. 1.2, effective July 1, 2008. 49
(l) Creditor Limitations. – A mortgagee or trustee that elects to pa y any tax deferred by 50
the owner of a residence subject to a mortgage or deed of trust does not acquire a right to foreclose 51
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as a result of the election. Except for requirements dictated by federal law or regulation, any 1
provision in a mortgage, deed of trust, or other agreement that prohibits the owner from deferring 2
taxes on property under this section is void. 3
(m) Construction. – This section does not affect the attachment of a lien for personal 4
property taxes against a tax-deferred residence. 5
(n) Application. – An application for property tax relief provided by this section should 6
be filed during the regular listing period, but may be filed and must be accepted at any time up 7
to and through June 1 preceding the tax year for which the relief is claimed. Pe rsons may apply 8
for this property tax relief by entering the appropriate information on a form made available by 9
the assessor under G.S. 105-282.1. 10
(o) Reimbursement. – On or before September 1 of each year, each county tax collector 11
shall notify the Secre tary of Revenue, in a manner prescribed by the Secretary, of the county 's 12
total hold harmless amount. A county that fails to notify the Secretary of Revenue of its total hold 13
harmless amount by the due date is barred from receiving a reimbursement under this subsection 14
for that taxable year. On or before December 31 of each year, the Secretary of Revenue shall 15
distribute to each county its respective total hold harmless amount. 16
Any funds received by a county that are attributable to a city within the county must be 17
distributed to that respective city. Any funds received by a county or city because the county or 18
city was collecting taxes for another unit of government or special district must be credited to the 19
funds of that other unit or district in accordance with regulations issued by the Local Government 20
Commission. 21
In order to pay for the reimbursement under this section and the cost to the Department of 22
Revenue of administering the reimbursement, the Secretary of Revenue shall draw from 23
collections recei ved under Part 2 of Article 4 of this Chapter an amount equal to the 24
reimbursement and the cost of administration." 25
SECTION 2. There is appropriated from the General Fund to the North Carolina 26
Association of County Commissioners ("Association") the nonrec urring sum of twenty million 27
dollars ($20,000,000) for the 2026 -2027 fiscal year to be used by the Association to provide 28
grants to local governments for the purpose of transitioning those governments to shortened 29
reappraisal cycles and thereby ensure more frequent and accurate property valuations. Grant 30
funds provided under this section shall be used by local governments for one -time capital 31
investments in technological infrastructure that improve local capacity and efficiency in 32
conducting reappraisals, i ncluding the acquisition of specialized software, data migration, and 33
the implementation of digital systems. In awarding grants under this section, the Association 34
shall prioritize awarding grants to local governments operating on a reappraisal cycle of mo re 35
than four years. For purposes of this section, "local governments" means counties, cities, or towns 36
conducting reappraisals of property under Subchapter II of Chapter 105 of the General Statutes 37
as of the effective date of this section. 38
SECTION 3. There is appropriated from the General Fund to the Department of 39
Revenue ("Department") the sum of two hundred fifty thousand dollars ($250,000) in 40
nonrecurring funds for the 2026-2027 fiscal year to be used by the Department to study how to 41
efficiently and ef fectively implement a system of automatic income eligibility verification for 42
applicants for property tax relief under G.S. 105-277.1, 105-277.1B, and 105-277.1C. 43
SECTION 4. There is appropriated from the General Fund to the Department of 44
Justice ("Department") the recurring sum of two million dollars ($2,000,000) beginning with the 45
2026-2027 fiscal year to support eight full-time equivalent attorney positions at the Department 46
to assist local governments and the Department of Revenue with property tax app eals cases 47
arising under Chapter 105 of the General Statutes. 48
SECTION 5. Section 1 of this act is effective for taxes imposed for taxable years 49
beginning on or after July 1, 2027. Sections 2, 3, and 4 of this act become effective July 1, 2026. 50
The remainder of this act is effective when it becomes law. 51