New senior tax exemption: Big savings for many

Proposed change to exemption is 'real money off your tax bill'

By Josh Bickford
Posted 11/30/17

Last year, a senior citizen in Barrington earning more than $28,000 could receive a tax exemption of $368.

This year, a new proposal would offer the same senior citizen an exemption of about …

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New senior tax exemption: Big savings for many

Proposed change to exemption is 'real money off your tax bill'

Posted

Last year, a senior citizen in Barrington earning more than $28,000 could receive a tax exemption of $368.

This year, a new proposal would offer the same senior citizen an exemption of about $2,700.

"That's real money off your tax bill," said Barrington council member Steve Boyajian, who is chairman of the ad hoc tax exemption committee.

Mr. Boyajian and other members of the ad hoc tax exemption committee have been working for months on drafting a new income-based senior tax exemption. 

At a meeting on Monday night, Nov. 27, the committee reached an apparent consensus on the new exemption structure — members are still working on some of the details but the proposal could be headed for a vote on Dec. 11.

If the recommended proposal is approved by the town council, it could mean a significant financial break for dozens of older Barrington residents. How big a break would depend on how much money the residents earn each year.

Mr. Boyajian said the proposed income-based exemptions are tied to the area median income — for a two-person household in Barrington, the area median income is $57,700. A resident earning up to 30 percent of the area median income, would qualify for the largest exemption, $3,500. 

Residents earning between 30 and 35 percent of the area median income would receive an exemption of $3,333, and those earning between 35 and 40 percent, would receive an exemption of $3,166.

While the existing exemption structure offered larger breaks for people earning less than $28,000, it extended a flat rate exemption of $368 to all other seniors who earned more than $28,000. 

The new proposal, however, includes much larger exemptions to residents earning between $28,000 and $69,200, or up to 120 percent of the area median income. Residents who fall into that income range could earn exemptions of between $2,833 and $500.

Early resistance

The creation of a new senior tax exemption structure has been hotly debated over the last few months.

In order to build the new policy, the town requested income information from all senior residents who were planning to apply for the exemption. 

The request was met with resistance — older residents stopped by the town hall to complain, wrote letters to the editor, and crowded into the council chambers to vent frustrations with members of the ad hoc tax exemption committee.

Many seniors did not want to share their income information with the town. Some feared that their personal information could be compromised, while others felt that town officials should continue to offer the flat rate exemption to all, regardless of how much they earn each year.

"Your action is simply elderly discrimination," said one resident during the meeting.

Mr. Boyajian and other town officials have, numerous times, tried to explain why they were altering the senior tax exemptions. They said a number of older residents were concerned that a large tax increase — due in part to the passage of a $68.4 million bond to build a new middle school — was going to force them to sell their homes and move out of Barrington. 

The town council heard the pleas for help and formed the ad hoc tax exemption committee.

"Our goal was to give people more," said Mr. Boyajian. "But we couldn't do it blindly."

Mr. Boyajian said about 500 people submitted applications for a senior tax exemption. While some of the applications actually excluded the property owners from receiving any exemption — some people did not meet the residency requirements — the vast majority of applicants stand to receive greater tax credits through the new proposal.

Mr. Boyajian used an example of a senior couple who was earning about $30,000 annually. In prior years, that couple would receive an exemption of $368 on their annual tax bill. With the new proposal, the same couple would receive an exemption of more than $2,500.

"That's about seven times more than what they saw before," Mr. Boyajian said. 

The ad hoc committee is also considering a flat rate exemption ranging between $100 and $200 for residents who earn more than 120 percent of the area median income.

Revenue neutral?

Initially, town officials said they wanted to keep any change in the senior tax exemption structure "revenue neutral," meaning that the town would extend the same amount of lost tax revenue with the new policy as it did with the prior.

But Mr. Boyajian said that is not likely to happen.

While last year's senior exemption totaled $543,836, the proposed exemption is expected to total $587,666. That figure climbs to about $750,000 if officials also include a flat rate exemption of $200 to all senior residents who earn more than 120 percent of the area median income.

"I think that's an increase everyone can swallow," Mr. Boyajian said. 

In the new proposal is approved, officials said it would require a close examination as it enters its second year. Mr. Boyajian said the committee wants to make sure the new exemption structure is "sustainable."

Deadline looms

The deadline to apply for a senior tax exemption is Friday, Dec. 1. 

For more information, call the town hall at 401-247-1900.

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