During the final week of the 2025 Legislative session House Bill 231 and Senate Bill 542 were passed to mitigate the impacts of the 2023 and 2025 reappraisal of residential and commercial properties. The bills will significantly change the tax rate structure for residential and commercial properties. The changes to tax rates are primarily contained in SB 542, but HB 231 has language that amends sections of SB 542. Most of HB 231 is void upon signing both bills. For the purposes of this document SB 542 is referenced as the controlling law.

Senate Bill 542 is implemented in two phases. The first phase applies to tax year (TY) 2025 and will generate the tax bill issued in November 2025. The second phase will begin in 2026 (TY 2026) and be permanent unless changed by a subsequent Legislature. It will show up on tax bills issued in November 2026.

Senate Bill 542 will cause tax shifts from residential property and small commercial property to all other classes of property. This is due to reductions in the tax bases of local governments and schools. For these taxing jurisdictions to maintain their budgets they will raise mill levies. That will increase the taxes on the classes of property that did not receive tax rate reductions. It will also reduce the tax savings to residential and commercial properties that did get lower rates.

The major tax shift will take place in November of 2025. Because the first year of SB 542 lowers all residential tax rates and the rates for small commercial properties, levy increases will occur on the November tax bill.

In 2026 when the tax rate increases on second homes and short-term rentals, taxpayers in some jurisdictions will see slightly lower taxes than their 2025 bill if they have these types of property in their locality.