MONTGOMERY — Legislation capping annual property tax increases at 7% is headed to Gov. Kay Ivey's desk to be signed into law.

The House of Representatives approved slight changes to the legislation on Wednesday and sent it to Ivey, who can either sign the bill into law, veto it or suggest an executive amendment.

House Bill 73 (HB73) by State Rep. Phillip Pettus (R-Killen) would cap yearly property tax increases after a reappraisal. The legislation was amended several times on the House floor, bringing the final capped amount to 7%.

The bill initially capped residential property increase cap at 3% and commercial property at 5%. Pettus offered a floor amendment pushed by the League of Municipalities and county commissions. The amendment capped expenditures at 7% for both types of property.

The bill was initially set up for a three-year sunset, meaning the legislature would have to re-approve it after those three years. However, the Senate changed the sunset provision to occur every five years.

Exceptions to the 7% cap include:

  • real property that has never been assessed 

  • additions or improvements to real property, including new construction, not including repairs to or ordinary maintenance of an existing structure or the grounds of the property

  • changes to the classification of the property 

  • changes in ownership of the property, except for transfers between spouse or family members for no or nominal consideration, including upon death of the owner and transfers due to redemption after foreclosure of a mortgage, tax sale, or tax lien 

  • property located in a tax increment district 

If signed into law, it would take effect on October 1.

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