Several bills regarding property tax exemptions for disabled veterans and their surviving spouses and the surviving spouses of servicemembers who die in the line of duty are under consideration this session.
Current law provides that for the real property tax exemption for the surviving spouse of a servicemember who died in the line of duty, dwellings qualify for a full exemption if they do not exceed the average assessed value of a dwelling that is situated on property that is zoned as single family residential. If the value of the dwelling exceeds the average assessed value, the portion of the assessed value that exceeds the average assessed value is taxable. SB 895 (Rouse), HB 2737 (Tata), and SB 900 (DeSteph) would establish a local option to provide for a total exemption for dwellings situated on property that is zoned as single family residential. SB 900 also includes language stipulating that localities would not be liable for a refund for taxes paid by a surviving spouse of a member of the armed forces of the United States who died in the line of duty, but was not killed in action, for any tax year commencing prior to January 1, 2025, when the most recent expansion to cover line of duty deaths took effect. A subcommittee of Senate Finance and Appropriations opted not to take action on SB 895 and SB 900, and to refer them for further study.
HB 1868 (Feggans), which has passed the House, clarifies that the real property exemption available to a surviving spouse of a servicemember who died in the line of duty extends to deaths as a result of suicide.
HB 2404 (Scott) specifies that the real property tax exemption for disabled veterans and their surviving spouses and for the surviving spouses of servicemembers who die in the line of duty applies to driveways used to access the tax-exempt property. After failing to report in subcommittee on Monday morning, the bill was brought before the full House Finance Committee on Wednesday afternoon and unanimously reported.
SB 1312 (McPike) is a helpful measure that VACo supports. Introduced at the request of Stafford County, the bill would have required the Commonwealth to reimburse 50 percent of lost revenue associated with the property tax exemptions for disabled veterans or their surviving spouses and the surviving spouses of members of the armed forces who are killed in the line of duty, if at least one percent of real property was exempt from real property taxes in tax year 2022. (A member budget amendment, Item 255.10 #1s (McPike), would provide $42 million in FY 2026 for this purpose.) The bill narrowly failed in Senate Finance and Appropriations last week.
Item 251 #1s (Aird), which was introduced at the request of VACo and VML, would provide one-time funding of $103 million in FY 2026 to reimburse local governments for the amount of providing property tax exemptions for disabled veterans or their surviving spouses and the surviving spouses of members of the armed forces who are killed in the line of duty, if more than one percent of such locality’s otherwise taxable real estate was exempt from taxation. These provisions are modeled on legislation supported by VACo in previous years. The amendment also includes language that requires the Auditor of Public Accounts to convene a stakeholder group that would be charged with conducting a review of current exemptions and recent trends and an analysis of future growth, and developing options to address the ongoing cost to localities.
VACo Contact: Katie Boyle