The State of Alabama will apply a 7% annual cap on increases in taxable assessed property value this year, the result of legislation passed and signed into law last year.
The Alabama law applies the cap to agricultural, commercial, and owner-occupied residential properties. The new law took effect on October 1, 2024, and Alabamians will notice the change when tax bills are sent out this October. The law has a sunset provision after three years, meaning it will have to be reauthorized by the legislature.
Exceptions to the cap include:
- The property is located in a tax increment (TIF) district
- The property’s assessment classification changes; for instance, from residential to commercial
- The property changed ownership, unless it’s within families for no or nominal consideration, or due to death of the owner, or following redemption of the property after a foreclosure, tax sale or lien
- Real property that has never been assessed
- An addition has been added to the parcel, or a significant improvement has been made to the property
Opposition to property tax reform often comes from local governments, and reform efforts in Kansas have been waylaid, in part, by the same concerns. But the Alabama League of Municipalities supported the cap last year. Its Executive Director, Greg Cochran applauded passage of the bill:
“We appreciate the Alabama Legislature for hearing our concerns with HB73 by increasing the property tax cap from 3% to 7% on future property value growth, as well as adding an exemption on TIF districts and including a three-year sunset provision. This will better allow our municipalities to fund essential services in their communities.”
Limiting the increase in taxable assessed values requires a constitutional amendment in Kansas. Earlier this year, the Senate approved a 3% annual limit; the House-approved plan used a rolling average, but a compromise was not reached, leaving the issue open for the 2026 Legislature to address.
