Elected officials in Habersham County and its seven cities have a crucial decision to make in the coming months as they consider whether to opt out of a new law approved by Georgia voters in November.
The law, which received overwhelming support with 65% of Habersham County voters backing the constitutional amendment, HB 581- property and sales tax reform. It introduces significant changes to the county’s and cities property tax systems and creates remedies aimed at providing property tax relief.
Under the terms of the new law, local governments must decide by March 1, 2025, whether to participate. If the county and cities do nothing, the law will automatically go into effect, providing voters with the opportunity for tax relief by capping property assessment values at the inflationary rate.
It will also give voters an opportunity for additional tax relief by providing for a Flexible Local Option Sales Tax (FLOST) in a referendum that could be scheduled for later in 2025.
However, if any of the cities within the county opts out, the referendum for the new tax will not take place. Additionally, the law does not have a provision for those that opt out now to “opt in” later.
Key provisions of the law
The new tax legislation, which took effect on January 1, 2025, aims to provide tax relief to homeowners and streamline the administration of property taxes. One of the most significant changes is the introduction of a floating homestead exemption, which will apply to all taxing jurisdictions in Georgia.
The exemption will be based on the assessed value of the home, with the base year value set as the 2024 assessed value for homes receiving the exemption in taxable year 2025. In subsequent years, the base year value will be adjusted to the assessed value of the preceding year, with an annual increase allowed up to the inflationary rate determined by the state revenue commissioner. The exemption is in addition to any existing non-floating or fixed homestead exemptions.
According to county officials, for homeowners in Habersham County, the impact would be minimal, as the county already offers floating and freeze exemptions that are more beneficial than the new statewide exemption. However, for the cities in Habersham County, which currently have fixed homestead exemptions, the floating exemption would be in addition to their existing programs.
Tax assessment notice, appraisal changes
The new law also makes important changes to the way property tax assessment notices are handled. Assessment notices will no longer use the previous year’s millage rate but instead will be based on an estimated roll-back millage rate for the current year. A disclaimer will be added to property tax bills if the adopted millage rate exceeds the roll-back rate, alerting taxpayers to a potential tax increase.
Other updates to the tax assessment process include:
- Property appraisals will be required at least once every three years to ensure accurate valuations.
- The lock statute for appeals will be adjusted, limiting the “lock” on property values to three years only if the taxpayer has received a reduction in value through an appeal.
- Confusing tax estimates will be removed from assessment notices, providing clearer communication to property owners.
FLOST: New local sales tax
The most notable feature of the new law is the creation of the Flexible Local Option Sales Tax (FLOST), which is designed to provide property tax relief. The sales tax, which can be levied in increments of 0.05 percent up to a maximum of one percent, will be available only in counties and cities that have implemented the floating homestead exemption.
For the tax to be enacted, the voters must approve a countywide referendum in favor of the new sales tax. Before the referendum can be placed on the ballot, both the county and at least the cities that make up 50% of the total municipal population within the county must agree to the tax through an intergovernmental agreement (IGA). The IGA would also specify the distribution of funds between the county and cities. The new tax could raise the total sales tax rate in Habersham County to 8%, pending voter approval.
The proceeds from the sales tax will be used exclusively for property tax rollback, and the amount of rollback provided will be clearly stated on each taxpayer’s property tax bill. The tax will be capped at five years, but it may be renewed through another local act and referendum.
Impact on local governments and taxpayers
This new law offers local governments a tool for providing property tax relief, but it also raises several important questions for local officials. For local governments with fixed homestead exemptions, switching to the floating homestead exemption could have significant implications for future property assessments, as it would cap assessment increases to the inflationary rate rather than the market rate.
Local officials must also decide whether to opt out of the statewide exemption, a process that requires holding three public hearings and adopting a resolution before March 1, 2025. This decision must be made after careful consideration of how the new law will affect their communities.
With the deadline for opting out fast approaching, Habersham County and its cities will need to engage in public discussions and evaluate the potential benefits and drawbacks of the new law. The decisions made in the coming weeks will shape the future of property tax assessments and tax relief in the county for years to come.
Next steps
Habersham County and its cities must decide on whether to opt out of the new law as the March deadline approaches. If they choose to participate, the referendum on the Flexible Local Option Sales Tax (FLOST) could take place later this year, giving voters an opportunity to decide whether to approve the new tax for property tax relief.
The information for this article was gathered from the Georgia Municipal Association (GMA) and the Association of County Commissioners of Georgia (ACCG). District 10 State Representative Victor Anderson (R-Cornelia) also contributed to this aticle for clarity.
