Why so many bills are hitting the cap now

Why so many bills are hitting the cap now

First: the state raised the values

Assessors price a building by what it would cost to rebuild it today, using cost tables the state publishes, then nudge that toward what similar properties are actually selling for. Three separate state moves pushed those numbers up at nearly the same time. The first hit the 2025 assessment: for a decade the state had been discounting its own cost tables, holding building values at 70% of the table price, and for 2025 it lifted that discount to full — so costs that had been marked down for ten years snapped back to par overnight. Base rebuild costs jumped hard, 30 to 50% on many commercial buildings. The second hit 2026: the underlying tables themselves, years out of date, were replaced with new ones built to match how far labor and materials had actually run up since the pandemic. The third is trending, which happens every year — assessors move values toward recent local sale prices, and where housing markets ran hot after 2020, that lifted homes on its own. Stack the three together and statewide assessed value rose about 12% in a single year: commercial up 16%, industrial up 16%, homes up 10%. None of it was a tax anyone voted on. It was the value side of the bill catching up all at once.

When the value the cap is measured against goes up, more bills reach the ceiling. The increase landed unevenly. A home's rebuild price is still adjusted toward real local sale prices, so its jump is softened. A farm building has no sales to compare against, and a state rule bars adjusting farm buildings toward the market, so the full increase passes straight through.

Second: a new law shrank the deductions

In 2025 the legislature passed Senate Enrolled Act 1. It left the 1/2/3% caps alone. What it changed was the deductions — the amounts you subtract before the rate is applied. The standard homestead deduction, a flat $48,000 today, shrinks each year toward zero by 2030. A percentage-based deduction grows to partly offset it, and businesses with under $2 million of equipment became exempt.

Trading a flat deduction for a percentage one helps higher-value homes and raises the taxable share of lower-value ones. The owner of an expensive house generally sees a cut. The owner of a modest home can see a double-digit increase. A farmer with buildings is hit hardest of all, because barns sit in the 3% class and get no new deduction at all.