North Carolina Governor Calls Proposal to Cap Property Taxes a 'Con Job'—But Voters Will Decide

North Carolina residents will have the opportunity to vote on two significant tax-related measures this November, which could impose limits on property and personal income taxes. One of the proposed amendments would mandate the state legislature to enact laws restricting property tax increases, although it does not specify the actual cap, leaving that decision to lawmakers. The second amendment aims to reduce the constitutional maximum for personal and corporate income tax rates from 7% to 3.5% starting in January, preventing the state from raising the rate above this threshold in the future.

Proponents of the property tax cap argue that it would help control the escalation of property tax bills and curb excessive local government spending. However, critics contend that such a cap could hinder municipalities' ability to address local needs, potentially impacting funding for essential services such as education, emergency response, and parks. North Carolina's Governor Josh Stein, a Democrat, has expressed strong opposition to both amendments, labeling them as "con jobs" that would ultimately shift the tax burden onto working-class citizens.

The North Carolina Realtors Association has taken a neutral stance on the proposed amendments, according to statements made to Realtor.com. North Carolina is among ten states with significant ballot measures that could affect both homeowners and potential buyers. Realtor.com has published a guide detailing the midterm ballot measures for 2026.

Supporters of the tax cap assert that it would prevent governments from continually raising property taxes. A report by the John Locke Foundation, a free-market think tank, highlighted that property tax revenues had surpassed inflation and population growth by $2.6 billion over the past decade. Republican House Speaker Destin Hall, who supports the amendment, stated that it would put a stop to "runaway property tax hikes."

Public sentiment appears to be leaning towards the limitation of property taxes, as evidenced by an Elon University poll conducted earlier this year, which found that 72% of respondents supported the idea. Nathan Goldman, a scholar at North Carolina State University, cautioned that the proposed changes could lead to unintended consequences. He noted that property and income taxes represent the two largest sources of revenue for the state, and if both amendments are approved, residents might face increased costs in other areas, such as sales taxes and user fees.

"The growth formula, any exceptions, and the treatment of revaluation years will determine whether this is a modest guardrail or a binding constraint on local budgets," Goldman explained.

When it comes to property tax obligations, North Carolina ranks 33rd among the 50 states and Washington D.C. concerning property tax burden, based on data from the Tax Foundation. As of 2024, the state has an effective real estate tax rate of 0.66%. While the average household in the U.S. pays approximately $3,119 annually in property taxes, a home valued at North Carolina's median price incurs about $1,896 in yearly taxes.

According to the U.S. Census Bureau, 66.6% of housing in North Carolina is owner-occupied. When factoring in a mortgage, the median monthly cost for homeowners is around $1,631. The state is also home to a significant number of older homeowners, positioning it as a focal point for the impending Great Wealth Transfer in the coming decades. At the same time, North Carolina has become increasingly attractive to younger generations, including Gen Z.

Governor Stein has emphasized the need for the state to enhance housing affordability. Earlier this year, he signed Senate Bill 445, which aims to boost housing production and support the development of accessory dwelling units. Another legislative measure was introduced to reduce mandatory minimum parking requirements, facilitating easier construction across the state.