States focus on personal property tax relief

2025 reforms and 2026 proposals reshape compliance, valuation and exemptions

Many states implemented changes in 2025 to ease the burden of business personal property taxation by enacting legislation or passing regulations that were considered beneficial to taxpayers. These state-level reforms will have an impact on personal property tax compliance reporting, valuation and assessment, and taxability for 2026 and beyond in Alabama, Arkansas, Connecticut, Indiana and Texas. Colorado and Georgia also made adjustments authorized by existing legislation.

In addition, this SALT Alert also addresses several proposals and initiatives that did not pass in 2025 or are being considered in 2026 that are worth monitoring as the trend to reduce or simplify business personal property taxation continues. 

2025 legislative and regulatory update 

Alabama¹

Alabama enacted legislation providing that effective Oct. 1, 2025, up to $100,000 (previously $40,000) in market value of tangible personal property owned by a business is exempted from state property tax. This change applies only to the state portion of the ad valorem tax. Any county or municipality may also adopt the exemption, but otherwise, ad valorem tax levies for those taxing jurisdictions would still apply. All filing requirements remain unchanged. 

Arkansas²

Arkansas revised the reporting and assessment for the personal property tax so that all leased vehicles are assessed to the lessee instead of the lessor. The legislation defines the “vehicle owner” as the lessee of the motor vehicle with a lease term exceeding 30 days, thereby shifting the responsibility for annual property tax filings and payments to the lessee. This change applies to assessment years beginning in 2025 and thereafter (with stated immediate effect), and shifts the tax responsibility from the leasing company to the individual or business leasing the vehicle.

Although the law states the change was effective immediately, assessors throughout Arkansas relied on a state attorney general’s opinion interpreting that because the legislation did not include an emergency clause, the act technically would not take effect until August 2025.³ This interpretation has essentially prompted a one-year delay in operational impact despite the “immediate” statutory impact. Therefore, the 2025 tax year bills due in 2026 will likely remain the responsibility of the leasing company.

Additionally, certain counties in Arkansas have notified leasing companies that the lessor may continue to maintain responsibility for property tax reporting and tax payments for the 2026 tax year, provided the leasing company submits an executed Vehicle Leasing Affidavit affirming responsibility.

Overall, this legislative change is prompting many questions from leasing companies and possible inconsistencies in practical application by taxing jurisdictions. Also, this change could create a misalignment between historical contract language and new statutory responsibility, as well as possible billback issues.

Colorado⁴

While no new legislative changes impacting business personal property taxes were enacted during 2025, certain provisions of legislation enacted in prior years modified both the statewide exemption threshold and assessment ratio applicable to the 2025 and 2026 tax years. The exemption threshold increased due to biennial inflation adjustments, while the assessment ratio change provides a phased reduction for certain property classes. 

The original $50,000 statewide exemption was enacted by Colorado in 2021 and was increased to $52,000 for the 2023–2024 cycle through the first biennial inflation adjustment. With the second biennial adjustment in effect, the statewide exemption is now $56,000. This exemption applies if the total actual value of taxpayer's personal property on a “per-county” basis is equal to or less than the exemption threshold. It should be noted that the statute does not provide the exemption of personal property on a taxpayer's schedule if the total actual value is above the threshold.

In 2024, Colorado enacted legislation that adjusted the statewide assessment ratio for certain property classifications. For most property classes, including business personal property, the assessment ratio was set at 27% for the 2025 tax year, decreases to 26% for 2026, and further decreases to 25% beginning in 2027 and thereafter. 

Connecticut⁵

Legislation enacted last year made changes to the valuation of motor vehicles in Connecticut. This update changes how motor vehicles are assessed for property tax purposes, retroactive to the 2024 Grand List and affecting tax bills that were issued on July 1, 2025. The legislation allows municipalities to adopt a modified depreciation schedule for motor vehicles that uses the Manufacturer’s Suggested Retail Price (MSRP) adjusted by a depreciation schedule.

The new method shifts valuation guidance from National Automobile Dealers Association (NADA) values. This change also increases the first-year depreciation to 90% of MSRP from 85%. These changes generally result in higher assessed values for vehicles for property tax purposes.

Georgia⁶

While Georgia did not adopt new legislation impacting personal property taxes in 2025, an increased exemption threshold from legislation enacted in 2024 was implemented last year. This bill allows taxable tangible personal property to be exempt from ad valorem tax if the actual fair market value of the total amount of taxable tangible personal property does not exceed $20,000 (prior to enactment, this threshold was $7,500). 

This exemption is measured on a per-county basis and applies to all state, county, city, and school levies within that county. Annual filing of the standard personal property tax return (Form PT-50P) is still required, but no special form is necessary for the exemption.

Indiana⁷

Indiana enacted major reforms to the business personal property tax in 2025 to provide tax relief for businesses by increasing the exemption threshold from $80,000 to $2 million of acquisition cost for the 2026 assessment date and thereafter. While Indiana originally planned to raise the exemption threshold from $80,000 to $1 million for the 2025 assessment date, with an additional increase to $2 million in 2026, subsequent legislation repealed the increase for 2025.

Additionally, Indiana removed the 30% valuation floor for assets placed in service after Jan. 1, 2025, with a clarification in subsequent legislation that the 30% floor applies if the property is located in an existing tax increment allocation area for which the base assessed value is determined before Jan. 1, 2025. Indiana has also repealed requirements for the use of Indiana’s Personal Property Online Portal (PPOP-IN). The provision will disallow personal property tax filings on the portal beyond 2025 but will keep PPOP-IN accessible for historical data.

Texas⁸

In 2025, Texas enacted legislation incorporated into Proposition 9, a voter referendum that was subsequently approved, that increases the ad valorem tax exemption for business personal property from $2,500 to $125,000 in appraised value beginning in 2026. In addition to effectively creating a significantly broader partial exclusion for business personal property, this shift in policy will impact Texas personal property compliance in several ways. The exemption applies per location within a taxing unit, which allows companies with multiple locations to receive the exemption for each site.

Lessors of tangible personal property are entitled to the exemption within a taxing unit regardless of where the property is located within the taxing unit. Aggregation rules apply for related business entities with taxable situs at the same location in a taxing unit and that compose the same unified business enterprise. The chief appraiser of a local appraisal district will also have the authority to investigate related businesses at the same site to enforce aggregation.

The Texas Comptroller is expected to update Form 50-144 for 2026, with the various local appraisal districts reflecting applicable changes. The new forms should include a simplified one-time certification process to claim the exemption while certifying that the market value of the tangible personal property is under $125,000.

Taxpayers will need to annually review to determine if the appraised value of their tangible personal property is still under the threshold, with updates to the certification only required if their status changes. However, the chief appraiser may still require a rendition, so best practice will be to continue to certify annually to fully ensure eligibility for the exemption.

Other proposals and developments 

Several states were unsuccessful in enacting legislation or proposed personal property tax measures in 2025, while other states are considering potential updates to state tax policies and legislation in 2026. While many legislative proposals or initiatives dealing with personal property tax ultimately will not be enacted or implemented, the following personal property tax proposals that were either considered in 2025 or already being considered in 2026 merit continued attention. 

• Arizona — Last year, the Arizona Senate passed legislation with a focus on property tax relief for small- to medium-sized businesses, but the Arizona House ultimately did not vote on the bill.⁹ If enacted, the bill would have raised the business and agricultural personal property tax exemption to $500,000 of full cash value. The current exemption is $269,905 for the 2025 tax year and is estimated to increase to $294,600 for the 2026 tax year based on current inflation adjustments.¹⁰
• District of Columbia — The District of Columbia City Council introduced the Personal Property Tax Simplification Amendment Act of 2025 on April 21, 2025.¹¹ The bill, which is still pending in committee, would increase the current personal property tax exemption for businesses in the District of Columbia from $225,000 to $325,000 of taxable value. This would also remove the requirement for taxpayers under the exemption threshold to file the annual personal property (FP-31) tax return form with the DC Office of Tax and Revenue.
  The District currently taxes personal property with the first $225,000 of taxable value being exempt. This exemption was established in 2008, and the Council estimates the exemption value would currently be $324,000 if adjusted for inflation. 
• Florida — Voters will be asked to consider a new proposal later this year that could impact agricultural businesses for personal property, following passage of a state legislative joint resolution in 2025.¹² The proposed constitutional amendment would exempt business farm equipment from property tax and if approved, would apply for the 2027 tax year and thereafter.
• Louisiana — Louisiana attempted to revamp several aspects of its state and local tax system with legislation that led to a proposed constitutional amendment (Amendment 2). Specific to personal property tax, Amendment 2 addressed the taxation of inventory for purposes of the personal property assessment along with a related plan to sunset the inventory tax credit for C corporations.
  Amendment 2 also would have authorized parishes to eliminate the inventory ad valorem tax, and would have allowed the state to compensate parishes that chose to eliminate or reduce the inventory tax. The plan to put forth Amendment 2 to a public vote was adopted by the Louisiana legislature in the third special session of 2024.¹³ However, Louisiana voters defeated Amendment 2 on March 29, 2025.
• Maine — During a special legislative session last year, a Maine proposal would have eliminated property tax on business equipment with a value of less than $50,000 and would have prohibited municipalities from taxing business equipment that would be exempt at the state level.¹⁴ The bill did not advance, as it was designated “Ought Not to Pass” in committee.
• Michigan — A current Michigan proposal would amend the General Property Tax Act to change how the date of receipt for return filing and tax bill payment dates are currently determined. This proposal would require local governments to use the United States Postal Service (USPS) postmark date for all property tax documents to allow consistency and standardization and bring Michigan in line with other states.¹⁵
  A separate proposal is currently being considered to provide an exemption to properties from school-related millages if the owner has no dependents enrolled in public schools.¹⁶ There is also some preliminary traction in Michigan on restarting the failed “Ax MI Tax” amendment to eliminate both real and personal property taxes.
• Missouri — Several proposals to reduce or eliminate both real and personal property taxes have been brought forward in recent years, and 2025 was no exception. Two of last year’s proposals would have reduced the assessment percentage of tangible personal property over a period of years.¹⁷ A third proposal would have offered similar reduced assessment percentages in addition to specific exemptions for motor vehicles and farm equipment.¹⁸ All of these changes would require approval through constitutional amendment and have not been approved to date.
• Nebraska — Nebraska proposed legislation in 2025 to restore the $10,000 de minimis exemption for tangible personal property reporting that had been eliminated in 2020. This bill did not advance from the Revenue Committee.¹⁹
• North Carolina — North Carolina is considering several property tax modifications, property tax relief studies, and reduction and reform for 2026 that may impact real property and homestead and veterans’ exemptions. These proposals are currently in the preliminary stages focused on real property and are unlikely to materially affect business personal property tax reporting for 2026 and 2027 as currently structured.²⁰
• Oklahoma — A legislative proposal would have changed the annual reporting deadline for submitting a personal property list to the county assessor from March 15 to April 15. The bill did not advance last year.²¹

Commentary

Of all the changes enacted last year, the most significant state developments that will impact personal property tax filings for 2026 occurred in Indiana and Texas. One of the common themes reflected in the developments described above is to increase exemption thresholds for taxable business asset reporting to help small businesses avoid or simplify personal property tax rendition filings and eliminate related taxes. Other reforms include adjustments to the valuation rules for personal property tax with changes to the depreciation floor and state-level assessment ratio, as well as valuation, depreciation and reporting modifications that are relevant to motor vehicle lessors.

With respect to personal property tax proposals that have not been enacted to date, similar trends can be spotted. This legislation includes additional efforts to increase the taxability threshold, the elimination or reduction of inventory tax, the standardization of acceptance for postmarks for filing requirements, filing deadline changes, and specific changes to niche industries. Grant Thornton will continue to monitor any developments related to these proposals.