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Homestead Tax Relief

August 2, 2021
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WRITTEN BY Brittany Whitley

Homestead tax relief reduces the financial burden associated with the property taxes paid on one’s place of residence, but does not cover commercial, investment, vacation or vacant properties. In Missouri, a homestead property is defined as the primary dwelling or residence owned or rented by the claimant, including up to five acres of the land upon which it is built (RSMo. 135.010). Under current Missouri law, former prisoners of war are eligible for a full homestead tax exemption, and taxpayers whose household income is below a certain threshold ($27,000-$34,000) qualify for the Missouri Property Tax Credit. 

Highlights

  • Most property taxes are assessed, levied and collected by counties (RSMo. 137.035) to fund a range of public goods and services (e.g., schools, infrastructure, public safety).
  • Homestead exemptions exclude a specific dollar amount or percentage of property value when calculating the homestead property taxes. Homestead tax credits provide a discount or rebate to taxpayers based on the amount of property taxes due in a given year. 
  • More than half of states offer homestead tax exemptions or credits that are available to all homeowners, while most others offer homestead exemptions to specific populations, typically based on income, age, disability and/or veteran status. 
  • When individuals are required to apply for specific tax breaks, large portions of the eligible population typically do not receive the relief that they qualify for. These effects are strongest in low-income households and among minoritized individuals. 

Limitations

  • There is wide variation in state homestead tax relief programs, including program eligibility, maximum benefits and accompanying mechanisms to increase local revenue. It is difficult to estimate how much additional homestead tax relief in Missouri would impact local revenue across the state.
  • Estimating the impact of a new homestead property relief program is complicated by uneven uptake of homestead relief programs. In addition to statutory changes, policy implementation also depends on program awareness and accessibility of applications.
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