February 2026: AESA State Examiner

State‑Level Property Tax Changes, Elimination Efforts, and Their Implications for Education Service Agencies

Property taxes are at the center of an intense new phase in state tax politics. They provide more than one‑third of all K‑12 funding nationwide, yet homeowners are facing some of the fastest property tax bill increases in more than a decade. At the same time, elected officials and activists in more than a dozen states are pushing big changes—including ending property taxes altogether in some places. For education service agencies (ESAs), these debates are not abstract; they could reshape budgets, services, and even the long‑term role of ESAs in state education systems.

This article focuses on a set of “high‑activity” states where property tax policy is changing quickly or where major proposals are on the table: Florida, Georgia, Indiana, Iowa, Kansas, Nebraska, New York, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Wisconsin, and Wyoming. Even if your ESA is not in one of these states, the trends emerging there are early warning signs—and a guide—for what might come next.

Why Property Tax Reform Is Surging Again

State and local governments collected close to 800 billion dollars in property tax revenue in 2024, an 8 percent increase over 2023, which itself was nearly 9 percent higher than 2022—the fastest growth in at least a decade and a half. Much of this growth has come from rising residential property values, even as commercial property values have been flat or declining in many areas. That shift has put increasing pressure on homeowners, especially in fast‑growing or newly popular regions where remote work has driven migration and demand.

At the same time, state tax systems have become more volatile. Revenues have been buffeted by COVID‑era federal aid, shifts in consumer spending, and repeated rounds of state tax cuts. States that rely heavily on volatile revenue streams, like severance or corporate income taxes, face bigger swings, while those leaning more on stable sources like general sales and property taxes tend to be steadier. Yet many states are now deliberately trying to reduce reliance on property taxes, which had been one of their more stable “legs” in the traditional three‑legged stool of property, sales, and income taxes.

This has created fertile ground for bold proposals. According to a recent EducationWeek report, officials or activists in at least 10 states—Florida, Georgia, Kansas, Nebraska, Ohio, Oklahoma, Tennessee, Texas, Wisconsin, and Wyoming—have floated plans to eliminate homeowner property taxes, and at least six others are debating ambitious property tax relief. For ESAs and districts, that combination of rapid tax bill growth, political backlash, and revenue volatility raises serious questions about the stability and equity of school funding in the years ahead.

Recent Property Tax Reforms in High‑Activity States

Many of the most consequential changes for ESAs are not the headline‑grabbing elimination plans. Instead, they are caps, exemptions, and new rules that quietly restrict how much local revenue can grow over time.

New York has long limited annual property tax increases to about 2 percent and recently gave local governments more power to exempt homeowners aged 65 and older, shrinking the tax base even as costs rise. Wyoming has a 4 percent cap on property tax growth and will send a proposal to voters in 2026 to exempt 50 percent of a property’s assessed value from taxation. Utah now requires school districts to hold specific public hearings before raising taxes, and the state tax commission can block increases if local leaders do not follow every detail of the rules; in 2025, the commission blocked more than 40 million dollars in proposed school tax increases over procedural issues.

Ohio stands out as a “high‑activity” state where the legislature enacted four major property tax bills in the waning months of 2025. Together, House Bills 186, 335, 309, and 129 significantly change how school property tax revenues can grow and how county officials can control local levies:

• House Bill 186 (HB 186): Limits the growth of “outside” (voted) school district millage to the rate of inflation, while providing a state backfill for schools.
• House Bill 335 (HB 335): Limits revenue increases from “inside” millage (the first 10 mills) that arise from property reappraisals, effectively dampening the impact of rising values on local collections.
• House Bill 309 (HB 309): Modifies county budget commission laws to allow commissions to reduce or eliminate voted levies they deem “excessive” or “unnecessary.”
• House Bill 129 (HB 129): Fixes the “20‑mill floor” calculation by including emergency and substitute levies, which causes more levies to trigger tax reduction factors and limits revenue growth from rising values.

All four bills have downstream implications for Ohio ESAs, which rely on districts funded increasingly through compressed and constrained property tax streams layered onto a state system that already leans heavily on property taxes and sales taxes as major revenue sources.

For ESAs, the lesson is that caps, exemptions, and governance rules can gradually squeeze local revenue even without any one dramatic cut. That squeeze often shows up first in deferred maintenance, fewer staff, and reduced programming—areas where ESAs are frequently asked to help districts “do more with less.”

2026: Where Property Tax Bills Are Moving Fastest

As of early 2026, more than a dozen states are actively debating major property tax reforms. Some proposals seek full elimination of homeowner property taxes. Others attempt narrower relief, such as new caps, expanded exemptions, or constitutional rules that make it harder to raise taxes in the future.

In Texas, the governor has made eliminating school property taxes by 2027 his central goal, even as the lieutenant governor and others promote more modest cuts. In Florida, the governor supports a bold constitutional amendment that would let voters decide whether to eliminate homeowner property taxes, even as some lawmakers advance bills that keep school property taxes intact. In both states, property tax relief would likely rely on state revenues—especially general sales taxes—which tend to be more volatile over the business cycle than property taxes.

Indiana and Ohio show how partial reforms can still create serious strain. In Indiana, a series of property tax exemptions set to phase in over five years is already pushing district leaders to consider postponing building repairs, scaling back technology, or moving to four‑day school weeks. In Ohio, the 2025 package of four bills—HB 186, HB 335, HB 309, and HB 129—creates complex new limits on local tax growth and adds state and county veto points over school levies. For Ohio ESAs, this means districts’ revenue capacity will be constrained both by state formula design and by local commissions’ conclusions about which levies are “excessive.”

Meanwhile, states like Kansas, Oklahoma, Tennessee, Utah, and New York are exploring or enforcing policies that require voter approval, supermajorities, or state‑level veto power before taxes can rise. These policies may slow tax increases, but they also make local education funding subject to complicated politics and procedural traps, adding another layer of volatility alongside economic factors.

Eliminating Property Taxes: Big‑Bang Proposals and Ballot Measures

The most dramatic proposals aim to eliminate property taxes entirely, especially for homeowners. These ideas make powerful campaign messages but face serious fiscal and political hurdles. Replacing billions of dollars in property tax revenue with sales or income taxes is difficult, and often regressive, especially in rural or low‑wealth communities. Sales taxes and some income taxes are also more volatile than property taxes, making it harder to plan long‑term education budgets.

Still, the pressure is real. Activists or officials in Florida, Georgia, Kansas, Nebraska, Ohio, Oklahoma, Tennessee, Texas, Wisconsin, and Wyoming have recently pitched eliminating homeowner property taxes, with some proposals also targeting business property taxes. In several states, the action is moving directly to voters through ballot measures.

• In Tennessee, voters could decide in 2026 whether to ban a statewide property tax, limiting a potential future backstop for school finance.
• In Wyoming, voters will decide whether to exempt 50 percent of assessed value from taxation.
• In Nebraska, anti‑tax activists are gathering signatures for a 2026 constitutional amendment that would ban property, inheritance, and income taxes, forcing a complete redesign of the state’s revenue system.
• In Ohio, a citizens’ group is pushing a 2026 ballot measure to abolish property taxes; the governor warns it could require a 20 percent sales tax to backfill losses, with devastating impacts on schools and other local services.

It is worth recalling that voters have never approved statewide property tax abolition. Most recently, nearly two‑thirds of North Dakota voters rejected such a proposal in 2024. But even failed measures can drive compromise policies, such as tighter caps or broad exemptions, that alter school funding for years. The fear of “what if” can drive dramatic change, so be prepared.

For ESAs, pending legislation adds uncertainty in at least three ways:

• Districts may delay or renegotiate multi‑year contracts while awaiting legislative decisions.
• Districts may swing quickly between “expansion” and “cutback” modes as proposals advance or stall.
• States that lean more heavily on volatile revenue streams, like sales or severance taxes, may pass more risk along to ESAs and districts when downturns occur.

These efforts raise major risks for ESAs. Replacement taxes, especially sales taxes, tend to be more volatile and more regressive, potentially increasing pressure on ESAs to support high‑need districts as gaps widen. On the other hand, if states centralize more funding and accountability in response to elimination or large tax swaps, ESAs may gain a stronger role as regional implementation partners for equitable investments and targeted relief. This is a position service agencies should be prepared to advance and have the data and stories to back the efforts.

What ESA Leaders, Staff, and Governing Boards Should Do Next

The property tax debate is moving quickly and will likely remain politically charged for years. ESAs cannot control it, but they can prepare for it and help shape more responsible outcomes.

1. Map Your Exposure

First, determine whether your ESA operates in one of the high‑activity states highlighted here—especially Florida, Georgia, Indiana, Iowa, Kansas, Nebraska, New York, Ohio, Oklahoma, South Dakota, Tennessee, Texas, Utah, Wisconsin, or Wyoming. If you do, assign a staff member or small team to track all major property tax bills and ballot measures and to brief leadership regularly.^[2][3]

Next, quantify how much of your ESA’s revenue—and your client districts’ revenue—comes from property‑tax‑dependent local sources, including levies subject to caps, exemptions, or voter approval rules. In Ohio, for example, that includes assessing which member districts are most affected by HB 186’s inflation cap and backfill, HB 335’s inside‑millage limits, HB 309’s new county commission powers, and HB 129’s broader “20‑mill floor.”

Finally, understand how exposed your state is to overall revenue volatility, including reliance on more volatile tax types or sectors. States that lean heavily on severance or highly progressive income taxes, or that have recently cut taxes aggressively, should be especially careful to plan for downturns.

2. Engage Early in State Policy Discussions

ESAs are trusted technical experts. Use that credibility to offer nonpartisan analysis to governors’ offices, legislative fiscal staff, and tax committees. Explain in clear terms how specific proposals—like caps, exemptions, elimination, or Ohio‑style packages of multiple bills—would affect ESA contracts and the services districts rely on.

Where possible, support targeted relief approaches, such as income‑based “circuit breakers,” that help homeowners manage tax bills without flattening the entire local tax base. Make the case that stable, adequate school funding is a core public service, on par with public safety and infrastructure, and that tax reforms should be paired with long‑term strategies for managing volatility, such as rainy‑day funds and careful use of one‑time surpluses.

3. Plan for Multiple Financial Scenarios

Build simple three‑to‑five‑year scenarios for your ESA budget and service portfolio:

• Scenario A: Modest caps and exemptions, with slow but steady erosion of local capacity, as in cap states like New York or Wyoming.
• Scenario B: Aggressive tax relief with partial state backfill tied to sales or income taxes, as envisioned in Ohio’s HB 186 or some Texas and Florida concepts.
• Scenario C: Partial or near‑full elimination proposals that shift heavily to volatile revenue sources, as in elimination rhetoric in Texas, Nebraska, and Ohio’s ballot discussions.

For each scenario, identify which services are essential to protect and which could be restructured, consolidated, or delivered in new ways. Use examples from Indiana, Ohio, Utah, New York, and Wyoming to ground your planning in real‑world experiences like four‑day weeks, blocked tax increases, and deep base exemptions.

4. Prepare Your Board and Member Districts

Schedule a board work session focused on property tax trends in your state and region. Use the tables in this article and state‑specific examples—such as Ohio’s four bills, ballot measures in Tennessee and Wyoming, and cap regimes in New York and Wyoming—to show the practical stakes for ESA budgets and services.

Provide clear, plain‑language talking points for board members and superintendents that connect tax proposals to staffing levels, program offerings, facility upkeep, and your ESA’s role in equity and shared infrastructure. Emphasize that “small” changes in property tax policy, like caps or new approval rules, can add up over time and may interact with state revenue volatility in ways that amplify risk.

5. Move From Monitoring to Action

The politics of property taxes are unlikely to cool down soon. While sweeping elimination proposals may fail at the ballot box, their influence can still produce policies through reactive legislative action that weaken school funding and strain ESA budgets over time.

ESA leaders, staff, and boards can respond by:

• Staying informed about the details of property tax proposals in high‑activity states.
• Assessing and documenting the ESA’s financial exposure to property tax changes and to broader state revenue volatility.
• Engaging constructively with state policymakers to design reforms that ease tax burdens without undermining core educational services.
• Working with districts to develop realistic, student‑centered plans for different funding futures, including more centralized, more volatile, or more constrained systems.

By taking these steps now, ESAs can help ensure that efforts to fix problems with property taxes do not create deeper problems for students, educators, and communities.