“As we know, assessments have been going up for them, and a lot of people have problems with fixed incomes,” Nemes told Louisville Public Media last month. “We need to help them.”
Under the proposal, a home assessed at $200,000 that rises to $300,000 in value would still be taxed at the initial assessment of $200,000.
State Sen. Cassie Chambers Armstrong (D-Louisville) voted for the measure, citing the need for relief for low-income seniors.
He said he would prefer to test ways to make the policy less effective for wealthy homeowners, suggesting it not extend to homes valued at more than $1 million or $2 million.
Nemes said the legislative budget estimates the proposal would reduce state revenue by $5.5 million annually.
Local governments — which rely heavily on property taxes and set their own rates — haven’t received an official impact statement, Louisville Public Media said.
“We helped working class people with income tax,” said Nemes. “These old people have been paying tax all these years, now they don’t pay tax anymore.
Five related bills have been introduced in the Kentucky House, including a measure by Rep. Daniel Grossberg (D-Louisville) would end the exemption for homes valued at $500,000. Other Republican-backed bills would increase the existing homestead exemption from about $49,000 to $75,000 or $100,000.
The policy group warns of a wider impact
I Kentucky Center for Economic Policynonpartisan research organization, warned that sweeping changes to property taxes could make it harder to fund local schools and services.
By 2023, Kentucky collected $4.94 billion in property, motor vehicle, boat, aircraft and business equipment taxes – with most of the revenue coming from real estate. About half of the state’s property tax revenue goes to schools.
Property taxes provide 72% of local school revenue and 24% of total school revenue nationally. They also account for about 35% of county revenue and 23% of locally generated city tax revenue, according to the organization.
“Property tax is an important part of a separate, strong tax system because it adds stability to revenue,” the agency wrote. “Freezing, freezing or eliminating property taxes for broad groups of people, as some are proposing, equally benefits the wealthy and hurts Kentucky’s communities because it serves as the primary source of revenue for many local utilities.
“The property tax can be reformed in ways that make it fairer, but it must be protected as an important source of revenue.”
There are 445 special tax districts nationwide – many of which rely primarily or entirely on property taxes – to fund services such as fire protection, libraries, ambulance services, soil conservation and public health.
The current homestead exemption for seniors and disabled people is $49,100 in 2026, which is adjusted every two years for inflation.
