Property Tax Post: States Serve Up Tax Exemptions for Those Who Have Served

Veterans Day

Every year on Nov. 11, Americans observe Veterans Day. This year, in a show of support for our servicemen and women, some organizations and business have announced that they will give veterans free food and services (like haircuts and car washes). Aside from this weekend’s freebies, in many states, veterans and veterans’ organizations may also qualifying for property tax exemptions aimed at reducing their tax burdens.

Exemptions for Individuals

When it comes to individuals, eligibility for veteran property tax exemptions[1] are often conditioned on whether the applicant has suffered a disability as a result of his or her military service. But some exemptions are broader—extending to veterans, active services members, or both. Florida, for example, has exemptions for U.S. service members and veterans. The state provides a $5,000 property tax exemption for veterans who suffered a disability to the degree of 10 percent or more, due to misfortune or while serving during wartime. Florida also exempts real estate owned by permanently or totally disabled veterans that is used as a homestead if the individual was honorably discharged with service-related disability.

The state also provides an exemption for members of the U.S. armed forces who were deployed outside of the continental U.S., Hawaii, and Alaska in support of qualifying military operations in the preceding calendar year. The exemption is calculated based on the number of days deployed. The exemption is equal to the taxable value of their homestead as of Jan. 1 in the year the exemption is claimed, multiplied by the number of days deployed in the preceding calendar year, divided by the number of days in that year (365 or 366 in a leap year). To qualify for this exemption, the homeowner must have already qualified for the general homestead exemption.

In New Jersey, which the Tax Foundation deemed as having the highest property taxes in 2016, statutory exemptions are also available for dwellings and land of qualifying veterans. They must have served in active wartime or other emergency with service-related disabilities resulting in the permanent loss of both legs, permanent paralysis of both legs and lower parts of the body, total blindness, the amputation of at least two limbs, or another qualifying disability.[2] Applicants that served in conflicts in or after 1995 must also satisfy additional geographic requirements and direct support requirements.

In addition to the above-described exemption, New Jersey also offers a $250 deduction to honorably discharged veterans who served during active wartime irrespective of whether the applicant is disabled.[3] Those who qualify for the exemption and the deduction may claim both. New Jersey also offers a tax deferment for actively deployed service members, which allows them to put off paying their property tax without penalty or interest until 90 days after the last date of deployment.[4]

In large part, states across the U.S. offer different variations of property tax exemptions for veterans similar to those discussed above. Most of them also extend all or part of this relief to surviving spouses.

Exemptions Available for Organizations

It is fairly common for states to offer property tax exemptions to veterans’ organizations, as well. For instance, under North Carolina’s state constitution, real and personal property of veterans’ organizations is designated as a special class of property that is broadly excluded from property tax. In other states, exemptions for such organizations may be based on ownership and use of the property. For example, Ohio exempts real and personal property owned or occupied by veterans’ organizations from tax if the organization is tax exempt under Internal Revenue Code Section 501, and, with respect to real estate, the property does not produce income over $36,000 annually. Ohio also exempts real estate owned or occupied by a soldiers' memorial association and any real estate deemed necessary to carry out the organization's purpose.

Overall, it appears that most states have taken measures to ensure veterans can apply for relief from the obligation to pay all or part of their property taxes in light of the sacrifices they have made for the country. Certainly, this is a tax exemption that few argue against. And, on that note, it is only right that I conclude this post by thanking veterans and active military men and women for the service they have provided, and continue to provide, for our country.

Continue the discussion on Bloomberg BNA’s State Tax Group on LinkedIn: What kind of property tax exemptions does your state provide for veterans and members of the U.S. armed forces?

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[1] Although property tax is usually not assessed by the state, veteran’s exemptions are typically required or provided for under state constitutions.

[2] N.J. Rev. Stat. §54:4-3.30(a); N.J. Rev. Stat. §54:4-8.10(a).

[3] N.J. Rev. Stat. §54:4-8.11.

[4] N.J. Rev. Stat. §54:4-7.