House Bill 118, titled the Disabled Veterans Tax Relief Bill, increases the North Carolina property tax homestead exclusion for qualifying disabled veterans and certain surviving spouses. Under current law, the first $45,000 of appraised value of an eligible permanent residence is excluded from taxation; the bill raises that amount to $61,000. The bill keeps the existing eligibility framework, including requirements tied to honorable service, federal disability or death certifications, and North Carolina residency for the qualifying owner.
The bill also adds a state reimbursement mechanism for local governments. Beginning with taxable years on or after July 1, 2026, the State would reimburse counties and cities for one-half of the local tax revenue lost because of the increased exclusion amount. Local tax collectors must submit annual lists and related valuation and tax-rate information to the Secretary of Revenue, who would calculate and distribute the reimbursement. The Department of Revenue would also be authorized to use certain tax collections to cover the reimbursement and administrative costs.
In practical terms, the bill would reduce property tax bills for eligible disabled veterans and surviving spouses who own and occupy a permanent residence in North Carolina. It would also shift part of the fiscal impact from local governments to the State by partially offsetting lost local revenue. The measure amends G.S. 105-277.1C and affects county and municipal tax administration, as well as the Department of Revenue’s reimbursement responsibilities.
Because no committee transcript or vote record was provided, there is no documented debate or recorded sentiment in the supplied materials. Based on the bill text alone, the measure appears to be a targeted tax-relief proposal for veterans, with a built-in reimbursement structure intended to reduce opposition from local governments concerned about revenue loss.
The main point of potential contention is fiscal: supporters are likely to emphasize tax relief for disabled veterans and their families, while local governments may focus on the administrative burden and the fact that the State reimburses only 50% of the lost revenue. Another possible issue is the timing and implementation of the reimbursement process, including annual reporting requirements and the use of state collections to fund the payments.
Impact
The bill amends G.S. 105-277.1C to increase the disabled veteran property tax homestead exclusion from $45,000 to $61,000 for qualifying residences, effective for taxes imposed for taxable years beginning on or after July 1, 2026. It also creates a new subsection requiring the State to reimburse counties and cities for 50% of the revenue lost from the increased exclusion, with administrative procedures assigned to local tax collectors and the Secretary of Revenue. The bill therefore lowers property tax liability for eligible disabled veterans and surviving spouses while partially offsetting the fiscal effect on local governments.
Sentiment
The available materials show no committee discussion or vote history, so there is no recorded public sentiment to summarize. From the bill’s purpose and structure, the measure appears broadly supportive of disabled veterans and likely to be viewed favorably as a targeted tax-relief bill. The reimbursement provision suggests an effort to balance taxpayer relief with local government fiscal concerns.
Contention
The most likely area of contention is the fiscal impact on counties, cities, and special districts, since the bill expands a property tax exclusion and reimburses only half of the resulting lost revenue. Local governments may also be concerned about the administrative reporting requirements and the timing of reimbursements. Supporters, by contrast, are likely to focus on the policy goal of increasing tax relief for disabled veterans and surviving spouses.