The Wicomico County Council voted last night to approve a reduction in the Homestead Tax Credit from 10% to 5%, capping the year-to-year increases county homeowners see in their property tax bills.
While complicated, this approach works to limit tax bills while property assessments are rapidly increasing. However, when property assessments decline (as they have recently in every county) homeowners find that their property tax bills are often still rising because the artificially reduced tax bills (due to this credit program) have yet to “catchup” with true market values. Lowering the Homestead Tax Credit from the maximum rate of 10% to 5% means that the county can only tax 5% of the assessment increase in each year effectively reducing the property tax a homeowner would pay on that property.
This change will take effect for FY 2013 and it only applies to owner occupied homes.