Hyattsville City Council to Consider Lowering Homestead Tax Credit Threshold
Benefits would remain small for most homeowners
Hyattsville city council is slated to discuss changes to its property tax structure on February 3, 2025. According to the presentation slides in the agenda packet, city staff are recommending that the council lower the Homestead Tax Credit threshold to 6% from 10%, though the memo attached to the discussion item puts the recommendation at 5%.
As previously reported by Route One Finance, few Hyattsville homeowners actually benefit from the city’s Homestead Tax Credit because Hyattsville home values usually don’t increase more than 10% in a given year. According to state data, approximately 12% of Hyattsville homeowners who have applied and are approved for the Homestead Tax Credit would benefit from the city’s Homestead credit on their next tax bills if the city council sets the limit at 10%. That rises to 30% if the city council sets the limit at 6%, which would cost the city an additional $73,000 in foregone revenue versus keeping the cap at 10%. The median non-apartment residential unit is set to see its assessment value increase by 3.9% for the next tax bill. The median credit at 6% would be about $51 if the city keeps its property tax rate steady.
The Homestead Tax Credit effectively limits how much home assessments can increase for eligible property owners by “capping” the assessable value of their home and providing a credit for property taxes on value above that amount. Local governments can choose where to set the cap, up to 10%.
The discussion comes after the city hired PFM Group Consulting in late 2022 to study the city’s homeowner and homestead property tax credits. PFM Group presented its report to the city council in October 2023, and city staff made an additional presentation in October 2024.
Hyattsville property tax base up 16.3%
The meeting agenda also includes approval of $285,000 for a new trash truck, a purchase that would usually be financed through the capital projects budget, and discussion of the city’s American Rescue Plan Act spending.
As of publication time, the FY 2023 audit had not yet appeared on the city’s website. Staff previously told the council it would be ready in December 2024. It was due to the state on October 31, 2023.