HB1582: HB1582 Fayette County; school district ad valorem tax; provide homestead exemption

This bill creates a new homestead exemption from Fayette County school district property taxes, but unlike a fixed-dollar exemption, its value changes year to year. Using tax year 2025 as a baseline, the Fayette County tax commissioner would calculate how much more the school district collects in ad valorem taxes for education each subsequent year. If that increase is more than the full base year amount, the extra money gets set aside and used to fund a homestead exemption the following year, with the Fayette County Board of Education deciding the exact dollar value. If collections do not grow enough, the exemption for that year is set at zero. Homeowners must apply once with the tax commissioner to claim the exemption, and it renews automatically afterward. The exemption does not apply to state, county, municipal, or independent school district taxes. Because it changes the constitution's tax rules, the bill needed a two-thirds vote in both chambers and must also be approved by Fayette County school district voters in a November 2026 referendum before taking effect January 1, 2027.

• Creates a homestead exemption from Fayette County school district property taxes whose dollar value changes each year based on tax collection growth compared to 2025.
• Directs the Fayette County tax commissioner and Board of Education to calculate and set the exemption amount annually, using only funds collected above the 2025 baseline.
• Sets the exemption to zero for any year in which tax collections do not exceed the full 2025 baseline amount.
• Requires homeowners to file a one-time application with the tax commissioner, after which the exemption renews automatically each year.
• Requires a countywide referendum in November 2026 for Fayette County school district voters to approve or reject the exemption before it can take effect.
• States the exemption applies only to school district taxes and not to state, county, municipal, or independent school district property taxes.

Homeowners in the Fayette County school district who claim a homestead exemption, the Fayette County tax commissioner and Board of Education who must administer the calculation, and voters in the school district who will decide the measure in a November 2026 referendum.

If approved by voters, some Fayette County homeowners could see a reduction in their school property tax bill in years when tax collections grow, but the exemption could shrink to zero in years without growth, making the tax break unpredictable from year to year rather than a fixed amount.

• Section 1 defines 'base year' as 2025 and requires the tax commissioner to compare each later year's school tax collections to that baseline.
• Section 1(c) explains that if collections exceed the 2025 baseline, the excess is set aside to fund the exemption the following tax year, with the Board of Education choosing the exact value.
• Section 1(c)(3) sets the exemption to zero dollars for any year where collections do not exceed the 2025 baseline.
• Section 1(d) and (e) require a one-time application for the exemption, which then renews automatically unless the homeowner becomes ineligible.
• Section 1(g) states the exemption applies to all taxable years beginning on or after January 1, 2027.
• Section 2 requires a two-thirds vote in both the House and Senate because the bill affects constitutional tax provisions.
• Section 3 requires a Fayette County school district referendum on the Tuesday after the first Monday in November 2026, with automatic repeal of the Act if voters reject it or the election is not held.

1. 2026-05-12Effective Date 2026-05-12
2. 2026-05-12Act 686
3. 2026-05-12House Date Signed by Governor (House)
4. 2026-04-10House Sent to Governor (House)
5. 2026-04-02Senate Passed/Adopted (Senate)
6. 2026-04-02Senate Committee Favorably Reported (Senate)
7. 2026-03-27Senate Read and Referred (Senate)
8. 2026-03-27House Passed/Adopted (House)

• Josh Bonner (R, HD-073)Primary sponsor
• Karen Mathiak (R, HD-082)
• Derrick Jackson (D, HD-068)
• Debra Bazemore (D, HD-069)

1. PassedHouse voteMarch 27, 2026

   153 yea, 0 nay (20 not voting, 3 absent)

   Local Calendar : House Vote #772

2. PassedSenate voteApril 2, 2026

   49 yea, 0 nay (3 not voting, 2 absent)

   Local Consent Calendar: Senate Vote #927

• property taxes
• homestead exemption
• Fayette County
• school district funding
• local referendum