SB 398 Summary

• Eliminates homestead property taxes by creating a full exemption from property taxation for primary residences effective January 1, 2011.

• Reduces state sales and use tax rate from 7% to 5.5% and expands the tax base to include most services (except legal services, health/mental health services, and charitable services).

• Establishes state distribution to local units to offset lost property tax revenue from homestead exemptions using gross assessed values, with distributions made in May and November.

• Increases renter's deduction for income tax purposes from $3,000 to $8,000 per taxable year.

• Prohibits liens on homesteads after December 31, 2010, including special assessment liens, tax liens, and liens for unpaid utilities or municipal violations.