HB 118

This bill proposes changes to property tax and sales tax. The bill sets the taxable value of residential real property at 0% of fair market value. Additionally, starting April 1, 2027, a 2% sales tax increase is introduced, raising the general sales tax rate from 4% to 6%, with exemptions for certain industrial facilities during permitting and construction. Revenue from the additional sales tax would be allocated to a new Property Tax Reduction and Replacement Account. This account would fund reimbursements to counties for lost revenue due to the 0% taxable value on residential property. Counties would calculate and report tax reductions annually, and funds would be distributed proportionally if the account balance is insufficient. Any remaining funds in the account would be reviewed by the legislature for potential use in local government distributions. The implementation of this bill is contingent on the adoption of a constitutional amendment that is also sponsored by the Revenue Committee, LSO number 26LSO-0100.