HB396 Alabama 2025 Session

Updated Feb 23, 2026

Notable

Summary

Primary Sponsor: Kenneth PaschalRepresentative
Republican
Session: 2025 Regular Session
Title: Taxation and Revenue; Homestead ad valorum taxes of certain veterans prohibited from inclusion in debt-to-income ratio
Summary: HB396 would allow qualifying disabled veterans to receive a tentative homestead tax exemption certificate before buying a home and prevent lenders from counting those taxes in debt-to-income calculations.
What This Bill Does
The bill would require County Property Tax Commissioners to issue a tentative certificate of permanent and total disability to disabled veterans with a 100% rating before they purchase a homestead, after they submit specific information including an affidavit, the purchase agreement, and VA disability documentation, with issuance within 20 days of receiving everything. The tentative certificate would be treated as a valid exemption when the veteran purchases the homestead. It would also prevent settlement agents and loan closing officers from counting ad valorem homestead taxes in the debt-to-income ratio for borrowers who provide the tentative certificate, and the Department of Revenue would establish the form that shows the exempt tax amount. The act becomes effective June 1, 2025.

Who It Affects
Disabled veterans with a 100% disability rating (and their spouses, if applicable) who plan to purchase a homestead and may apply for a tentative exemption certificate.
Settlement agents, loan closing officers, and mortgage lenders who must exclude ad valorem taxes from debt-to-income calculations for borrowers presenting a tentative certificate.

Key Provisions
Requires County Property Tax Commissioners to issue a tentative certificate of permanent and total disability to veterans with a 100% rating before purchasing a homestead, upon submission of an affidavit, the purchase agreement, and VA disability documentation, with issuance within 20 days after receipt of all required information.
Prohibits settlement agents and loan closing officers from considering ad valorem taxes for a homestead in a borrower's debt-to-income ratio when the borrower provides a tentative certificate; the Department of Revenue must establish the form of the certificate that includes the tax exemption amount, effective June 1, 2025.

AI-generated summary using openai/gpt-5-nano on Feb 22, 2026. May contain errors — refer to the official bill text for accuracy.
Subjects: Taxation & Revenue