Property taxes continue to be a top concern and an overwhelming burden for many Pennsylvania homeowners. This onerous tax has jeopardized the American dream of home ownership for countless individuals, especially our seniors who may have paid off their home, but can no longer afford to keep it due to high property taxes. In the latest effort to address this issue, the state Legislature has passed legislation that will allow for a referendum on property tax reform to appear on the ballot during the November general election.
The exact wording of the question has not yet been determined; however, it will address the amount of money that can be excluded on a homeowner’s property tax bill.
Currently, the state Constitution only permits local governments – counties, municipalities and school districts – to exclude up to 50 percent of the median assessed home value from a homeowner’s tax bill. However, with a successful vote in November, this homestead exclusion could be increased up to 100 percent of primary residences.
For example, under the current homestead exclusion, if the average home value in your school district is $100,000, up to $50,000 can be excluded from your tax bill if your school district elected the full 50 percent exclusion rate. So, if the value of your home is assessed at $150,000, your local property tax rate would only be applied to $100,000 of that value ($50,000 would be excluded).
With the new change, your entire home value could be excluded from your tax bill. Local governments would still be responsible for establishing exclusion amounts for homesteads within each district. However, they would no longer be required to cap the property tax relief that is offered. As a result, homeowners would only be responsible for paying taxes on the value of their homes that exceeds the exclusion amount chosen by their local governing body.
A successful referendum would give school districts the option to offer more substantial property tax relief. It does not, however, require school districts to reduce property taxes or dictate how it’s to be done.
Local revenue options to fund the homestead exclusion currently include increases in the Earned Income Tax (EIT) or Personal Income Tax (PIT). Localities may be provided with additional choices, like local sales tax, if this constitutional amendment is approved by voters in November.
If approved in November by the majority of voters, legislative action would still be needed in order to put an increased homestead inclusion into action.
While this vote alone would not eliminate everyone’s property taxes, it is an important step in the right direction.
Representative Ryan Mackenzie
Pennsylvania House of Representatives
Media Contact: Tricia Lehman