Georgia Property Tax Reform: HB 581 Caps, Opt-Outs, and FLOST

Georgia’s property tax reform took effect January 1, 2025, under House Bill 581. If you have an active homestead exemption on your primary residence, your taxable assessed value can now rise by no more than the inflation rate or three percent per year, whichever is lower. The same law authorized a new local sales tax that can be used to cut property taxes dollar-for-dollar, tightened the assessment notice and appeal rules, and let local governments opt out during a short window in early 2025. Whether you actually get the cap depends on where you live and whether you filed for a homestead exemption.

What HB 581 Caps

The core of the reform is a statewide “floating” homestead exemption that limits how fast your assessed value can grow.¹ Each year, your assessment can increase by the Consumer Price Index inflation rate or three percent, whichever is smaller. If nearby home values leap 12 percent in a year, your taxable value still moves only by the capped amount.

The mechanic runs through a base year value. For homes with an active homestead exemption when the law took effect, the base year is the 2024 assessed value.² Each year afterward, that base adjusts up by the published inflation figure, capped at three percent. The exemption equals the gap between your home’s market-based assessed value and the adjusted base year value, so anything above the cap is shielded.

The cap has a floor built in. If the market falls and your assessed value drops below the adjusted base year value, your assessment tracks the lower number. You get the downturn benefit without losing your cap protection when values recover.

Remember that Georgia already taxes only 40 percent of fair market value.³ The new cap operates on that assessed number, not on the county’s estimate of what your home would sell for. Your listed market value can still climb; what’s controlled is what gets multiplied by the millage rate.

Who Qualifies

The floating exemption applies only to properties with an active homestead exemption, meaning the home must be your primary residence.¹ Rental houses, second homes, commercial buildings, and vacant land aren’t covered.

If you’ve never filed for a homestead exemption, that’s the first step. Applications go to your county tax commissioner, or in some counties the tax assessor’s office.⁴ You can apply during the prior year up to the April 1 property tax return deadline, or up to the end of the 45-day appeal window on your assessment notice. To qualify for a given tax year, you must have owned the home on January 1. Once approved, the exemption generally renews automatically as long as you continue to live there.

What Resets the Cap

The protection doesn’t follow a property forever. Two events reset the assessed value back to full current market value: selling the home, and making substantial physical changes to it.¹

When ownership changes, the new owner’s base year resets to the purchase-year value.⁵ A longtime owner’s capped value doesn’t pass to the buyer.

Additions and new construction also fall outside the cap. Adding a bedroom, building a detached garage, or putting in a pool gets added to your assessed value at full market rates.⁶ Routine maintenance and cosmetic updates generally don’t trigger a reassessment. The line is between preserving what already exists and adding something new.

The Opt-Out Problem

The cap applies by default, but the law gave local governments a narrow window to reject it. To opt out, a jurisdiction had to hold three public hearings, pass a resolution, and file it with the Secretary of State between January 1 and March 1, 2025.⁷ Anyone who took no action stayed in.

Several major taxing authorities opted out, particularly school systems in Georgia’s largest counties, including Fulton, Gwinnett, Cobb, DeKalb, and Chatham. School taxes are usually the biggest slice of a property tax bill, so a school-system opt-out sharply narrows the practical benefit for homeowners in that area. Your county government can still be in the system while your school district is out; in that case the cap applies only to the county and city portions of your bill. Confirm with your county tax commissioner which local taxing authorities are participating for your parcel.

The FLOST Sales Tax Offset

HB 581 also authorized a new one-percent Floating Local Option Sales Tax, or FLOST, that must be used for dollar-for-dollar property tax reductions.¹ Unlike sales taxes tied to specific projects, every FLOST dollar collected has to lower the millage rate. When consumer spending rises, the millage reduction grows; when spending dips, the offset shrinks.⁸

A county can only hold a FLOST referendum if the county government and every property-tax-levying city within it have an eligible homestead exemption in effect. A single city opting out disqualifies the entire county from FLOST.⁷ That link gave local governments a strong reason to stay in.

Assessment Notices and Appeals

Assessment notices must now show the previous year’s value alongside the new proposed value, together with your right to appeal and the deadline. If you disagree with the assessment, you have 45 days from the date the notice was mailed to file an appeal with your county board of tax assessors.⁹ Miss that window and you lose the right to challenge the assessment for the year. Appeals can be filed by mail, in person, or by email if your county has adopted a written policy allowing electronic filing.

Georgia recognizes four grounds for a property assessment appeal under O.C.G.A. 48-5-311:

Value: the assessed fair market value is too high.
Uniformity: comparable properties are assessed at lower values.
Taxability: the property shouldn’t be taxed, or should be classified differently.
Exemption denial: your homestead exemption application was rejected.

On a value appeal, the burden of proof is on the county board of tax assessors, not on you.¹⁰ The assessor has to justify the number. Even so, bringing recent comparable sales, a professional appraisal, or documentation of property conditions strengthens your case. On an exemption denial, the burden shifts to you to prove you qualify.

A successful appeal can hold your valuation steady for up to three years under certain conditions. Board of equalization members also have to meet stronger training and qualification standards.

What This Means for Your Mortgage Escrow

If your mortgage servicer collects property taxes through escrow, any change in your bill flows into your monthly payment. Your servicer is required to run an annual escrow analysis, and a lower tax bill from the floating exemption or a FLOST reduction can produce a lower monthly payment or a surplus refund.¹¹

The reverse also happens. If your school system opted out and your school tax portion climbs, the analysis can show a shortage. Under RESPA, the servicer has to send an annual escrow statement within 30 days of the end of the computation year showing any surplus, shortage, or deficiency.¹¹ When you get a new tax bill reflecting the HB 581 changes, compare it to the prior year and, if there’s a meaningful decrease, ask your servicer about running an escrow reanalysis rather than waiting for the scheduled one.

1
Georgia General Assembly. House Bill 581 Property Tax Reform
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Georgia Department of Revenue. Overview of Floating Homestead Exemption and Annual Inflationary Index Rate
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Georgia Department of Revenue. Property Tax Valuation
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Georgia Department of Revenue. Property Tax Homestead Exemptions
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Newton County, Georgia. Frequently Asked Questions – House Bill 581 C. Homestead Exemption
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Emanuel County, Georgia. HB 581: What to Expect if You’re a Property Owner
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Association County Commissioners of Georgia. HB 581 (2024): Frequently Asked Questions Document
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Newton County, Georgia. House Bill 581 – Save the Homes Act
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FindLaw. Georgia Code Title 48 Revenue and Taxation 48-5-311
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Georgia Secretary of State. Subject 560-11-12 County Board of Equalization Hearings
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Consumer Financial Protection Bureau. Escrow Accounts – 1024.17