HB325 creates two new gross receipts tax deductions related to new residential housing. First, it allows taxpayers to deduct receipts from selling labor incurred during the construction of new residential housing. Second, it allows taxpayers to deduct up to $125,000 in a 12-month period from the sale of new residential housing, or up to $75,000 in a 12-month period from the sale of new residential housing intended for lease. The bill defines residential housing to include single-family residences, town houses, condominiums, and apartment buildings.
The bill also creates a hold harmless distribution to municipalities and counties so local governments are reimbursed for revenue losses associated with the new deductions. The distribution is tied to the amount of deductions claimed and the applicable local option gross receipts tax rates. The deductions cannot be claimed for renovation or remodeling sales, and a taxpayer may not claim both deductions for the same receipts during the same 12-month period. The act is set to take effect July 1, 2025.
Impact
HB325 would amend the Gross Receipts and Compensating Tax Act and the Tax Administration Act by adding new deductions and a local government reimbursement mechanism. It would reduce gross receipts tax liability for qualifying construction labor and sales of newly built residential housing, while requiring separate reporting and inclusion in the tax expenditure budget. Municipalities and counties would receive hold harmless distributions to offset the loss of local gross receipts tax revenue attributable to the deductions.
Sentiment
No committee transcripts or recorded votes were provided, so there is no direct evidence of debate or formal support/opposition in the available materials. Based on the bill text and caption, the measure appears to be a housing-incentive proposal aimed at encouraging residential construction and sales, with an accompanying effort to protect local government revenues. The absence of recorded discussion makes the overall sentiment difficult to assess beyond the bill’s apparent pro-housing policy intent.
Contention
The main policy tension in HB325 is between providing tax relief to stimulate new residential housing construction and sales, and preserving gross receipts tax revenue for state and local governments. A related point of contention is the scope of the deductions: the bill limits them to new residential housing and excludes renovation or remodeling, and it bars taxpayers from claiming both deductions on the same receipts. Local governments may also be attentive to the adequacy and mechanics of the hold harmless distribution, since it is intended to replace lost revenue tied to local option gross receipts taxes.