SB 97: Tax Revenue Amendments - Utah

Substitute #3 → Substitute #4 · 10 edits

MAJOR

This bill updates Utah's tax revenue laws by lowering the maximum reserve fund limits for cities and counties, reducing the residential property tax exemption for rental properties from 40% to 35% (with some exceptions), and requiring owners of business-owned homes to apply for the exemption. It also establishes a rebuttable presumption that business entities do not qualify for the residential exemption and mandates that counties report such properties to a state trust. Additionally, the bill excludes certain property value increases from new growth calculations and adjusts the certified tax rate formula for cities starting in fiscal year 2032.

Scope change

The bill expands the scope of the residential property tax exemption rules to explicitly include business entities and requires new application procedures for owners whose property eligibility has changed or who previously did not qualify.

FISCAL

Reduced the maximum fund balance limit for cities from 35% to 25% of total revenue for large cities, and modified limits for medium and small cities.

Modified the maximum fund balance limit for counties, changing the calculation method for large counties and increasing the percentage for smaller counties.

Excluded increases in the value of tangible personal property from the calculation of project area new growth.

Modified the certified tax rate calculation for cities to subtract excess reserve funds starting in fiscal year 2032.

ELIGIBILITY

Reduced the residential property tax exemption for rental properties from 40% to 35% of the property's value, with an exception for affordable housing.

Created a rebuttable presumption that property owned by a business entity does not qualify for the residential exemption.

REQUIREMENT

Requires property owners to file an application to receive the residential exemption if the property was ineligible the prior year, ownership changed, or the county suspects it no longer qualifies.

ENFORCEMENT

Requires counties to provide information about business-owned properties that successfully rebut the presumption to the Multicounty Appraisal Trust.

DEFINITION

Added a definition for 'household' to clarify who can claim the exemption and modified the definition of 'business entity'.

TIMELINE

Established specific effective dates for different sections of the bill, ranging from May 6, 2026, to January 1, 2027.

Substitute #2 → Substitute #3 · 6 edits

MODERATE

This bill updates Utah's tax revenue laws by adjusting reserve fund limits for cities and counties, tightening rules on residential property tax exemptions for tenants and business-owned properties, and refining how property value increases are calculated for tax rates. It also introduces new application requirements for property owners seeking exemptions and adds a penalty for failing to file required declarations after ownership changes.

Scope change

The bill expands the scope of residential property tax exemption rules to include stricter presumptions for business-owned properties and new application mandates for owners whose circumstances have changed.

FISCAL

City and county reserve fund limits were modified; cities now face tiered percentage caps based on total revenue size, and counties have new thresholds based on taxable value and population.

ELIGIBILITY

A rebuttable presumption was added stating that property owned by a business entity does not qualify for the residential property tax exemption unless the owner proves otherwise.

REQUIREMENT

Property owners must now apply for a residential exemption if the property was ineligible the prior year, ownership changed, or the county suspects the property no longer qualifies.

ENFORCEMENT

New requirements mandate that owners file written declarations within 90 days of ownership changes and that counties notify owners of potential exemption loss if they fail to file.

DEFINITION

New definitions were added to clarify terms like 'household' and 'business entity' in the context of residential exemptions.

TECHNICAL

The calculation for 'locally assessed new growth' was updated to exclude certain property valuation increases, and 'project area new growth' now explicitly excludes increases in tangible personal property.

Substitute #1 → Substitute #2 · 5 edits

MODERATE

This bill expands its scope to include towns in addition to cities and counties, allowing them to accumulate up to 100% of their prior year's budgeted property tax revenue in their general funds. It also modifies the residential property tax exemption by establishing a rebuttable presumption that business-owned properties do not qualify for the exemption and requiring owners to apply for the exemption if their eligibility status changes.

Scope change

The bill now applies to towns (previously only cities and counties) and introduces new requirements for business entities and property owners regarding residential tax exemptions.

SCOPE

Added provisions allowing towns to accumulate fund balances up to 100% of their prior year's budgeted property tax revenue, whereas cities and counties previously had lower limits.

ELIGIBILITY

Established a rebuttable presumption that property owned by a business entity does not qualify for the residential property tax exemption.

REQUIREMENT

Required residential property owners to file an application with the county if the property was ineligible for the exemption in the prior year, ownership changed, or the county suspects the property no longer qualifies.

Added a requirement for counties to provide information to the Multicounty Appraisal Trust regarding properties where owners successfully rebutted the business presumption.

DEFINITION

Added a new definition for 'household' to clarify which individuals living together share expenses and domiciles for exemption purposes.

Amended 3/3/2026 20:03:321 → Substitute #1 · 7 edits

MODERATE

This bill significantly tightens financial rules for Utah cities and counties by lowering the maximum amount of surplus funds they can keep in reserve and removing the ability to count excess reserves toward their certified tax rate. It also restricts the residential property tax exemption to one home per household, clarifies rules for business entities owning rental properties, and excludes certain property improvements from new growth tax calculations.

Scope change

The bill applies to all cities and counties in Utah, with specific new requirements for counties to report business entity information to the Multicounty Appraisal Trust.

FISCAL

Reduced the maximum fund balance cities can retain in their general fund from 35% to 25% of total revenue, and removed the provision allowing cities to subtract excess reserves from their certified tax rate calculation starting in 2032.

Lowered the maximum fund balance counties can retain in their general fund from 100% of prior year property tax revenue to 65% of total revenues for most counties.

Excluded increases in the value of tangible personal property from the calculation of 'project area new growth' used for tax increment financing.

Excluded certain physical improvements to existing structures from the calculation of 'locally assessed new growth'.

ELIGIBILITY

Limited the residential property tax exemption to one primary residence per household, regardless of how many homes an owner has in the state.

Clarified that business entities (like LLCs or corporations) generally do not qualify for the residential exemption unless specific conditions are met, establishing a rebuttable presumption against such claims.

REQUIREMENT

Required counties to provide information to the Multicounty Appraisal Trust regarding business entities that receive the residential exemption to help identify owners claiming exemptions on multiple properties.

Amended Excerpts 3/3/2026 20:03:321 → Amended 3/3/2026 20:03:321 · 5 edits

MODERATE

This bill amends Utah's tax code to adjust residential property tax exemptions, specifically reducing the exemption for rental properties and clarifying rules for owners with multiple homes. It also tightens limits on how much money cities and counties can hold in reserve funds and requires counties to report data on businesses receiving residential exemptions. These changes aim to increase local tax revenue and ensure fair application of tax breaks.

Scope change

The bill modifies the scope of tax exemptions by narrowing eligibility for rental properties and adding specific reporting requirements for business entities that qualify for residential tax breaks.

ELIGIBILITY

Reduced the residential property tax exemption for rental properties from 45% to 40%, with specific exceptions for low-income housing.

Clarified that owners of multiple primary residences in the state are allowed exemptions for each property that serves as a primary residence for a tenant, in addition to their own primary residence.

FISCAL

Lowered the maximum percentage of total revenue that cities and counties can hold in reserve funds, changing the limit from 35% to 25% for large cities and adjusting limits for smaller municipalities.

REQUIREMENT

Added a requirement for counties to provide information to the Multicounty Appraisal Trust regarding business entities that receive residential property tax exemptions.

TIMELINE

Established a new effective date for the reduction in city reserve fund limits, beginning in fiscal year 2032.

Introduced → Amended Excerpts 3/3/2026 20:03:321 · 5 edits

MODERATE

The bill was amended to expand the scope of property tax relief by clarifying and extending residential exemptions to include tenants and multi-family rental units under specific low-income conditions. It also introduces new requirements for counties to report business entities receiving residential exemptions to a state trust and adds limits on reserve funds for local governments.

Scope change

The bill's scope expanded from primarily defining tax rate limits to actively modifying exemption eligibility criteria and adding new administrative reporting requirements for local governments.

ELIGIBILITY

Residential property tax exemptions were modified to explicitly include properties where the primary residence is a tenant, regardless of whether the owner lives there, and to cover multi-family rental units subject to low-income housing commitments.

The residential exemption rules were clarified to specify that owners with multiple primary residences in the state are limited to one exemption per household, with specific exceptions for tenant-occupied properties.

REQUIREMENT

Counties are now required to provide information to the Multicounty Appraisal Trust regarding business entities that receive residential property tax exemptions.

FISCAL

New provisions were added to limit the total amount of reserve funds that cities and counties can maintain.

DEFINITION

The definition of 'primary residence' was updated to be based on where the owner's domicile is established.

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