IN SB0218

County, city, or town fiscal bodies may adopt ordinances to reduce the homestead property tax cap below the standard 1% to as low as 0%, with the reduced cap applying only to that municipality's net property tax revenue

Municipalities that adopt a reduced homestead property tax cap may impose up to four types of local option taxes to replace lost property tax revenue: local option sales tax (up to 1%), supplemental local income tax (up to 0.5%), supplemental innkeeper's tax (up to 5%), and supplemental food and beverage tax (up to 1%)

Revenue from the local option taxes must be used exclusively to fund replacement of the municipality's property tax levy loss resulting from the reduced homestead property tax cap

The reduced property tax cap takes effect for taxes first due and payable in the year following ordinance adoption and remains in effect each year the ordinance continues

Effective date is July 1, 2026, and the bill removes obsolete provisions related to 2009 property tax calculations while making conforming changes to existing tax code sections