The McDonough council has opted to stay in HB 581. The house bill creates the first homestead exemption on McDonough city taxes. The council’s decision also preserves the county’s option to ask voters for a new local sales tax.
McDonough Stay In HB 581
The McDonough council held three public hearings this week to consider House Bill 581. After the third meeting on Thursday evening, the council voted to stay in HB 581. Several council members thanked the community members who had attended the three hearings to learn more about the homestead. “I too want to share appreciation…it is so important for McDonough to have conversations with the public,” added Mayor Vincent.
“[The bill] provides a tax relief to our homeowners. Our homeowners voted for House Bill 581. Our citizens have voted in favor of tax relief,” remarked Councilwoman Thomas before motioning the city stay in HB 581. The motion passed unanimously 5-0. Council members Burt and Varner were absent.
The house bill, approved in 2024 and ratified by voters in November, created a statewide floating homestead exemption. All local governments are automatically in; they have until March 1 to opt-out. The floating homestead will limit homeowners’ annual property taxes to increase no more than the inflation rate. This is designed to prevent 10-20% increases year-over-year in a property tax bill, if a homeowner’s property value increases significantly. Many homeowners experienced this situation from 2021 to 2024. Additional resources about House Bill 581 are on the ACCG website, the Georgia counties association.
Editor’s correction: Homeowners will automatically receive the House Bill 581 exemption provided they have an existing homestead with the county. This is different than other homesteads which require a separate application at the county and city level. The Henry Reporter previously printed the HB 581 exemption would require an application.
An Example Tax Bill
Let’s look at an example: This example is based on a random homeowner within the city of McDonough. Their home was appraised at $215,100 in 2020. Their value increased to $345,700 by 2024, a 61% increase in four years.
During the five years of 2020-2024, the homeowner paid $2,025 in city property taxes. If HB 581 had been enacted in 2020, then the homeowner's city taxes would have been $1,631 instead. This represents a savings of $394, or about 20%.
A floating homestead offers greater tax savings as the homeowner’s property value increases over time. For example, many Henry County homeowners save over $1,000 annually on their county taxes. The county has had a frozen exemption in place since 2004. A frozen exemption is a type of floating exemption where, instead of increasing annually by the inflation rate, the assessed value is locked in or "frozen."
F-LOST Effect
Lastly, McDonough’s decision to stay in HB 581 preserves Henry County’s option to ask voters for a floating local option sales tax (F-LOST). This is a new local sales tax created in HB 581 which, if approved, would offset local property taxes. HB 581 requires the county and every city within said county to have a floating homestead exemption before they can ask voters for an F-LOST. The F-LOST can be up to one percent, or a fraction thereof. The county could ask for a half-cent sales tax for example.
Henry County's sales tax rate is presently 8%. This includes 4% state sales tax and 4% local sales tax. The local sales tax is then further broken down into one percent each for local option sales tax (LOST), used to offset property taxes, and three SPLOST programs — regular, transportation and education — all to pay for capital projects.
If Henry County voters approve an F-LOST, then the county and each city would receive a portion of the proceeds. This is similar to the existing LOST. Collections would then reduce the property tax rate. The F-LOST collections would greatly reduce, if not altogether eliminate, city property taxes. Based on recent discussions at city meetings, Henry County officials are interested in an F-LOST.
The school board’s decision to opt out of HB 581 does not affect FLOST eligibility. They voted to opt-out at their February 10 meeting.
Featured image shows McDonough City Hall. Clayton Carte photo.
