Alabama's Act 2024-344 (known as HB73) created a 7% annual cap on assessed value increases for owner-occupied Class III residential properties. Effective October 2024, this cap prevents the county from increasing your assessed value by more than 7% in any single year — protecting homeowners from sudden large assessment jumps driven by rapid market appreciation. However, the cap resets to full fair market value on any ownership change, and appealing your base fair market value still matters because a lower base means lower future maximums under the cap.
How the HB73 Cap Works
The 7% cap applies to your assessed value — which is 10% of fair market value. So if your assessed value was $25,000 last year, the county cannot increase it to more than $26,750 this year ($25,000 × 1.07), regardless of how much fair market values have increased in your area.
- ✓Cap: 7% maximum annual increase in assessed value
- ✓Applies to: Class III owner-occupied residential properties
- ✓Effective: October 2024 (Act 2024-344)
- ✓Resets to full FMV on: Ownership change (sale, transfer, certain refinances)
- ✓Example: $25,000 assessed value → maximum $26,750 next year regardless of market
Why Appealing Your Base Value Still Matters
The HB73 cap limits future increases but doesn't reduce an over-assessed base value. If your current fair market value is over-estimated, you're paying excess taxes now — and the cap will allow the county to increase from that inflated base each year. Winning a BOE appeal reduces your base, from which the 7% cap applies going forward, compounding the savings.
- ✓Without appeal: FMV over-estimated at $300,000; cap allows 7% increases from inflated base
- ✓With successful appeal to $250,000: Lower base; 7% cap from $250,000 each year forward
- ✓Compounding effect: Lower base × 7% annual cap = permanently lower assessment trajectory
- ✓Appeal your base every few years to maintain the benefit
The Reset Risk: What Buyers Need to Know
When a property changes ownership, the HB73 cap resets — the county reassesses to full fair market value in the year following the sale. Buyers purchasing a property where the previous owner had benefited from years of cap protection may see a significant jump in their first assessment. This is normal under Act 2024-344 and not appealable as an error.
Frequently Asked Questions
What is Alabama's HB73 assessment cap? ▾
Act 2024-344 limits annual assessed value increases for owner-occupied Class III residential properties to 7% per year. Effective October 2024.
Does the HB73 cap replace the need for a property tax appeal? ▾
No. The cap limits future increases but doesn't reduce an existing over-assessment. Appealing your fair market value reduces your current bill and creates a lower base from which the cap applies.
Does the cap reset when I sell my home? ▾
Yes. The cap resets to full fair market value on any ownership change. New buyers should expect their first assessment to reflect current market value.
What is the Class III assessment ratio? ▾
Class III owner-occupied residential properties are assessed at 10% of fair market value. The 7% cap applies to this assessed value.
Can I appeal even if the cap is protecting my assessment from increasing? ▾
Yes. If your underlying fair market value is over-estimated, you can appeal to reduce it — creating a lower base for future cap calculations.