A bigger homestead deduction, a new credit and the 1% cap, here's the plain-English version, plus the one form people forget to file.
For 2026 the standard homestead deduction is $48,000, there is a 40% supplemental deduction on the remaining assessed value, and a new automatic 10% credit is applied to qualifying homesteads. The long-standing caps still apply: 1% of gross assessed value for a primary residence, 2% for rentals and 3% for commercial. The single most important action for new owners is filing the homestead deduction with your county within about 4–6 weeks of closing.
Here is how the deductions stack on a hypothetical $300,000 assessed home. Your actual bill depends on your county's rate and district.
| Step | Amount |
|---|---|
| Gross assessed value | $300,000 |
| Less standard homestead deduction | − $48,000 |
| Subtotal | $252,000 |
| Less supplemental deduction (40% of subtotal) | − $100,800 |
| Net assessed value (taxable) | $151,200 |
| Tax before credits (at an illustrative local rate) | varies by district |
| Less new 10% homestead credit | − 10% of the bill |
| Cap check | final bill cannot exceed $3,000 (1% of $300,000) |
Figures are general guidance and updated regularly, ask us for today's numbers in your target area.
| Property type | Cap | Typical example |
|---|---|---|
| Homestead (primary residence) | 1% of gross assessed value | Your own home |
| Residential rental / second home | 2% | Investment property, condo for a student |
| Commercial / other | 3% | Business property |
Figures are general guidance and updated regularly, ask us for today's numbers in your target area.
This is why a condo bought for a college student costs more in tax than an identical home lived in by its owner, and why investors should budget at the higher rate.
The deductions are not automatic when you buy. You have to file for the homestead deduction with your county auditor after closing.
It is easy to forget in the chaos of moving, and forgetting it costs real money. We remind every client we close with.
Only your primary residence gets the homestead treatment. Rentals and second homes are capped at 2% and do not receive the homestead deduction, so your carrying cost per property is meaningfully higher than an owner-occupant's.
If you are running the numbers on an investment purchase, budget the higher rate from the start, it is one of the most common mistakes we see in first-time investor math. We will model it with you before you buy.
Buying, selling, investing, or just curious what your home's worth, reach out and one of us, a real person, texts or calls you right back.