Even though Tennessee state taxes are lower than most states in the country, property taxes remain a significant expense for homeowners and can increase over time due to rising property values. Fortunately, the state of Tennessee offers programs to help make property taxes more manageable, especially for elderly residents, people with disabilities, and veterans.

Tennessee's property tax relief program and property tax freeze offer financial assistance to eligible homeowners struggling with property tax burdens. The state funds this program, and successful applicants receive reimbursement to offset tax costs. This can be a great way to ease the financial strain of property ownership, especially for those on fixed incomes. Let's dive into the details of these programs.

Tennessee Property Tax Relief

The Property Tax Relief Program provides financial assistance to eligible populations, including people over 65, people with disabilities, veterans with disabilities, and surviving spouses of deceased veterans. For each category, candidates are required to own their primary residence and provide proof of income from all sources. Approved applicants are still required to pay property taxes. Depending on eligibility, recipients may receive full or partial reimbursement for property taxes.

Age-Based Requirements

To apply, you must be 65 or older by the end of the tax year. You'll likely need proof of age, such as a driver's license or birth certificate, along with your application.

• Past Maximum Income: $33,460
• Past Maximum Market Value for Calculations: $30,900

Disability-Based Requirements

If you have a disability that meets the Disability Determination Services definition, you may qualify regardless of age. Claims must have been validated by 12/31 of the year in which you're applying for relief.

• Past Maximum Income: $33,460
• Past Maximum Market Value for Calculations: $30,900

Veteran-Based Requirements

Disabled veterans are eligible for relief as defined by the program. Surviving spouses of eligible veterans may also qualify. Service records, VA disability ratings, and similar forms can support your application. Disabled veterans must complete form F-16 to provide consent to information sharing from the VA.

• Past Maximum Income: N/A
• Past Maximum Market Value for Calculations: $175,000

Income Limits

Tennessee sets a combined annual income limit for all household members. Income includes sources like Social Security, wages, pensions, etc. Disabled veterans and their surviving spouses are exempt from this income limit. Proof of income can be provided with a copy of a tax return, 1099, or W-2.

Residency and Property Ownership

You must be a Tennessee resident and own the home for which you seek relief. The property must be your primary residence. If you own a mobile home that qualifies as your primary residence, you might still be eligible for relief even if you don't own the land surrounding the house.

The Application Process

Your county trustee's office is the starting point for the application. Additionally, the city-designated collecting official may accept applications if your property is within city limits. Contact information is also on the state's official websites.

Deadlines are critical! They're usually about 35 days after the tax bill due date, but not always. You must complete your taxes by this deadline, even if you apply for reimbursement. Take advantage of this window, or you may not receive relief for that tax year.

How Relief is Calculated

Calculating your relief amount involves a few factors:

• Property assessment: Your home's assessed value plays a significant role. This isn't the same thing as your home's market value; it's a calculation specifically for tax purposes.
• County or city tax rate: Local tax rates determine how much you owe.
• Maximum market value: Your relief is based on a portion of your property's value—a maximum of $30,900 for seniors and disabled homeowners or $175,000 for disabled veterans and their surviving spouses in 2023.

Suppose your home is assessed at $150,000, and your county tax rate is 2%. If you're a senior homeowner, your relief calculation would be based on the first $30,900 of your home's value. Keep in mind that relief calculations adjust annually.

Tennessee Property Tax Freeze

The Property Tax Freeze program offers eligible homeowners the ability to lock in the property taxes on their principal residence at the amount they owe in the year they first qualify for the program. This base tax amount remains constant, regardless of future increases in property tax rates or county-wide reappraisals, as long as the homeowner continues to meet the eligibility criteria for the program. This ensures that qualifying homeowners, typically on fixed incomes or with limited financial flexibility, do not face increased property tax burdens as tax rates or property values change.

Eligibility for Tax Freeze

• Age Requirement: 65 or older.
• Income Limit: Standard state-calculated limits apply, but some areas offer higher local-option limits. It's best to check with your county and city officials.
• Primary Residence Requirement: Your property must be your primary home.

How the Tax Freeze Works

• Base Tax Amount: If eligible, your property taxes are essentially locked in at the rate you paid in your first year of qualification.
• Situations Where Taxes May Increase: Even with the freeze, your taxes can go up if you make significant improvements that increase your property's value or sell the approved property and buy a new one
• Participating Counties/Cities: 34 cities and 26 counties in Tennessee participate in the program.

Understanding Tennessee's Property Tax Relief Programs

Even in counties with low property taxes, Tennessee's property tax relief programs can benefit eligible homeowners. Tennessee generally boasts a lower cost of living than many other states, and these programs take an additional step to support affordability. A key point to remember is that some research and proactive action can go a long way in saving you money. By staying informed and understanding the resources available, you can ease your property tax burden and achieve more financial breathing room.