House Bill 118 increases North Carolina’s disabled veteran property tax homestead exclusion. Under current law, the first $45,000 of appraised value of a qualifying disabled veteran’s permanent residence is excluded from property taxation; the bill raises that exclusion to $61,000. The bill applies to qualifying owners who are North Carolina residents and either disabled veterans or surviving spouses who have not remarried, and it retains the existing definitions tied to federal veterans’ disability and service-connected death determinations.
The bill also creates a state reimbursement mechanism for local governments. Beginning with taxable years on or after July 1, 2026, counties and cities would be reimbursed for one-half of the property tax revenue lost because of the increased exclusion amount. The Department of Revenue would collect annual reporting from local tax collectors and distribute reimbursement funds each year, with administrative costs also paid from specified state tax collections. The act would take effect for taxes imposed for taxable years beginning on or after July 1, 2026.
HB118 amends G.S. 105-277.1C to expand the disabled veteran property tax homestead exclusion from $45,000 to $61,000 of appraised value, increasing property tax relief for eligible disabled veterans and certain surviving spouses. It also adds a new state reimbursement provision requiring the state to cover 50% of the local revenue loss attributable to the larger exclusion, shifting part of the fiscal burden from counties and cities to the state. The bill affects local property tax administration, Department of Revenue reporting and distribution duties, and the allocation of state tax collections used to fund reimbursements and administration.
The bill appears broadly favorable in concept, as reflected by its committee substitute progression and the absence of recorded votes or transcripted opposition in the provided materials. Its title and structure indicate a tax-relief measure aimed at disabled veterans, which typically draws bipartisan support. The available history suggests the measure advanced through committee and remained active, with no documented floor debate or recorded dissent in the supplied record.
The main policy issue is fiscal: the bill increases a property tax exemption for a targeted group while requiring the state to reimburse local governments for only half of the resulting lost revenue. That creates a tradeoff between expanding veteran tax relief and managing the impact on county and municipal budgets. Any contention would likely center on the adequacy of the reimbursement rate, the administrative burden on local tax collectors and the Department of Revenue, and the timing of implementation, rather than on the eligibility criteria for disabled veterans themselves.