Proposed NC property tax cap, affordable housing exemption set for debate

A proposal to limit property tax increases is set to go before state lawmakers Tuesday — an effort that could culminate with North Carolinians voting on the issue as early as this year.

The state House of Representatives’ Finance Committee is scheduled to discuss a proposed state constitutional amendment restricting how much city and county governments could raise property taxes each year. 

Amendments to the state Constitution must be approved by North Carolina voters. If the idea is approved by a supermajority of legislators, North Carolinians would be asked to decide the issue through a ballot vote, likely in November.  

The legislation, House Bill 1089, doesn’t outline a limit for property tax increases. It calls on state lawmakers to come up with specific restrictions at a later date — if the referendum is approved by voters.

The bill is part of a broader push by legislators in the Republican-controlled General Assembly to address affordability issues ahead of the midterm elections. 

Republicans in the state Senate last week approved a bill that would temporarily block county governments from applying appraisals conducted during this calendar year to property tax bills. Reappraisals often lead to higher property tax bills. Republican Senate leader Phil Berger has referred to that proposal as a “moratorium” that could bring temporary relief to taxpayers in a number of counties scheduled to reappraise properties this year — including Guilford and Harnett. Berger has framed the idea as simply buying time for the legislature to come up with more sweeping reforms.

The proposed constitutional amendment moving forward in the House could be that more sweeping idea, although it’s unclear if the Senate will go along if the idea passes the House.

Tax reduction has been a stated goal of Republican lawmakers for decades, but the proposed reappraisal moratorium and constitutional amendment are not guaranteed to pass. Neither Berger nor House Speaker Destin Hall has committed to supporting the other chamber’s idea for addressing rising property taxes.

Democrats have expressed skepticism over both plans. Senate Minority Leader Sydney Batch, D-Wake, chided Senate Republicans last week for failing to take up an amendment to Berger’s bill that would have lowered the state’s income threshold to qualify for property tax exceptions.

Rep. Lindsey Prather, D-Buncombe, said Monday — during a press conference calling for higher taxes on millionaires — that the property tax changes being proposed by GOP lawmakers seemed aimed more at gathering political credit than solving a problem.

“We can be the quote-unquote ‘good guys’ down here in Raleigh and say we’re going to lower your property taxes,” Prather said. “But all that means is that the local governments are going to have to be the ‘bad guys’ to raise revenue in other ways.”

Closing a loophole

The House Finance committee on Tuesday is expected to consider a proposal that could help municipal governments recoup more property tax revenue. The committee is expected to discuss House Bill 1042, which would tighten rules for nonprofit organizations that receive property tax exemptions.

The state currently allows certain organizations to avoid paying property taxes if they use their property entirely for charitable purposes and are not run for profit — a law that kept nearly $750 million worth of property out of Wake County’s tax base in 2025. The proposed change seeks to winnow down the list of who qualifies, especially nonprofits that provide affordable housing for low- or moderate-income people.