Property tax, data center bills likely to move through NC legislature this session

by Greg Childress and Christine Zhu, NC Newsline
April 21, 2026

Partisan legislators have squabbled over a state budget for months, but a few measures appear likely to pass the North Carolina General Assembly with support from across the aisle.

Lawmakers return to Raleigh today for the 2026 legislative session.

Property tax reform

Democrats and Republicans are in agreement that rising local property taxes are making it difficult for some low-income and senior homeowners to stay in their homes. But they don’t agree on how to address the problem.

Republicans are backing a proposed change to the North Carolina constitution that would allow state lawmakers to limit how much and how quickly property taxes can rise. They believe the amendment is needed to reel in what they say are unreasonable and unjustified increases in some counties.

The House Select Committee on Property Tax Reduction and Reform, formed by Republican House Speaker Destin Hall (R-Caldwell), approved the proposed amendment last week, putting it in play for the short session. The amendment would require a three-fifths vote in both chambers. If it passes, voters will be asked to approve it on the Nov. 3 ballot.

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Hall has been emphatic in recent weeks about the need to control local governments’ ability to increase property taxes.

“Property tax hikes are overburdening North Carolina families, who are footing the bill while some local governments take in far more than inflation and population growth can justify,” Hall said in a statement..

Democrats have been equally blunt in their criticism of the proposed amendment. Its passage, they say, would hamstring local governments’ ability to pay for schools, public safety and public health programs.

Many of them lay the blame for high property taxes at the feet of Republican legislative leaders and the cuts to state spending they’ve championed.

“For years, they have pushed state responsibilities like public safety and school funding onto counties and now fault them for providing basic services to their residents,” House Democratic leader Robert Reives said in a statement.

Reives pulled no punches, calling the constitutional amendment a political stunt to give vulnerable GOP incumbents “a platform to run on when very little of substance has been accomplished this biennium.”

State Rep. Julia Howard (R-Davie), co-chairwoman of the tax reform committee, told colleagues last month that she is certain voters will approve the measure if placed on the ballot.

“People are very concerned about their property tax, but they’re gonna speak loud and clear,” Howard said. “When they do, then it’s gonna be your responsibility to address the issue, and it’s not an easy fix.”

The N.C. League of Municipalities, which represents cities and towns across the state, believes lawmakers should focus on improving existing tax relief programs instead of limiting local governments’ ability to increase property taxes.

“The General Assembly has the ability to consider targeted tax relief through changes to the homeowner circuit breaker and homestead exemption programs, helping retirees now,” the league said in a statement.

Property taxes are the primary source of revenue over which locally elected officials have control, the league said.

Many cities and towns spend more than 40% of their general fund budgets on public safety, the league said, and any “significant restrictions on property taxes will ultimately lead to less safe communities.”

Affordable housing tax loophole threatens to drain local government budgets in NC

As NC Newsline previously reported, the committee also endorsed a proposed bill to close a loophole in a law that allows for-profit apartment complex owners to take advantage of property tax exemptions aimed at nonprofits.

The for-profit companies claim the tax exemptions by partnering with nonprofits that provide housing to low- and moderate-income residents. The loophole costs local governments tens of millions of dollars each year that would otherwise go to fund schools, libraries, and public safety.

The legislature could take up both proposals in its session starting this week. The tax loophole bill appears to have more bipartisan support than the levy limit proposal.

Data center tax breaks

Opposition to data centers is growing across the state, with a handful of municipalities implementing one-year moratoriums so they have more time to conduct research and write rules.

At the state level, Gov. Josh Stein wants legislators to modify or repeal sales tax exemptions for data centers. It’s a topic likely to gain bipartisan traction this session, and similar proposals have also been considered in other states this year.

Currently, North Carolina provides sales tax breaks on data center purchases of electricity and equipment. These exemptions were initially enacted in 2006 and expanded upon in 2015.

Stein urges review of data center tax breaks as cost to NC residents rise

“We lived in an entirely different world at that time,” Stein told the North Carolina Energy Policy Task Force earlier this month. “No one could have anticipated the explosive growth of data centers and how much energy they consumed, and because data centers at that point were a brand new industry, they benefited from financial incentives to induce capital to invest.”

Changing the tax breaks could save the state millions of dollars. The North Carolina Dept. of Commerce estimates that data centers in the state receive about $50 million each year in state sales and use tax exemptions, according to the governor’s office, and that number is expected to rise sharply as more data centers are planned and built.

A full repeal of the exemptions could leave the state with up to $450 million in revenue each year in the future, in addition to avoiding the substantial cost of the construction exemptions, Commerce projected. Even a partial repeal or rewrite could save the state tens of millions.

Stein noted that President Donald Trump has also made efforts to protect consumers from increased energy rates due to data centers driving up costs. The president called for a ratepayer protection pledge in March.

“We must be clear-eyed about the cost of data centers to ratepayers in terms of higher power bills, and clear about their cost to taxpayers in terms of lost revenue,” Stein told the task force.

NC Newsline is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. NC Newsline maintains editorial independence. Contact Editor Laura Leslie for questions: info@ncnewsline.com.