Explain This to Me: How 2016 legislation shifted property tax burden from commercial land to homeowners

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In 2016, the Idaho Legislature passed a bill that ended up having widespread ramifications for Idaho homeowners.

It changed the way the homeowner’s exemption worked.

Before the bill, each homeowner got an exemption on 50% of their home value, up to a floating amount tied to the Idaho Housing Price Index.

For instance, if your house was worth $200,000, you could get the maximum exemption and pay tax on $100,00 of the value, depending on that year’s index amount. If property values rose across the state, the index amount rose too.

Because of the way Idaho’s property tax system worked, the business and agricultural sectors made up the difference.

2016: Property tax change

But in 2016, that changed.

Instead of an index, the exemption was capped at a straight $100,000.

If your home is valued at more than $200,000 – your property tax burden rises.

BoiseDev graphic

If your house used to be worth $200,000 – and with the booming real estate market – went up to $400,000, your exemption would stay at $100,000. Instead of paying tax on $100,000, you now pay on $300,000. That means a lot more cash out of your pocket to pay property taxes.

In theory, at the time, the only areas that would see a material impact would be homes in Ada County. But property values statewide continue to rise – and homeowners are paying more and more in tax.

“What that’s done is shifted the total tax burden more on to homeowners and away from commercial landowners,” Sen. Maryanne Jordan said on the BoiseDev podcast last May.

‘Something has to give’

Jordan, a Democrat and Republican Rep. John Vander Woude last year worked on legislation to fix the exemption issue, by removing the $100,000 limit and bringing back the index. The bill went nowhere.

Property tax burden shift. Via City of Boise

“Homeowners are getting squeezed,” Jordan said. “Something has got to give. It’s an unfair balance at this point.”

Data provided by the City of Boise shows the trend since 2003. At that time, commercial properties in the city paid 51% of all property taxes. The 2020 estimate shows commercial properties at 35% of the burden, with homeowners now shouldering 65% of the burden – and the shift accelerated in the years since 2016.

New Boise Mayor Lauren McLean also cited the property tax shift as one ingredient driving increased property tax bills and emphasized that unlike in 2016 – it’s no longer just the capital city.

“Last year with Elaine Clegg, we organized council members around the state to share information with the legislature,” McLean said.  “When that shift happened, it was really only impacting Boise at the time, but now it’s impacting cities around the state. It had real impact on each of us as renters and homeowners in cities throughout the state.”

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