Local governments across North Carolina rely heavily on property taxes, and they could soon see more limits on tax collections.
While the income taxes you pay go to the state, counties and municipalities don’t collect any of that tax revenue. Instead, local governments rely on other revenue sources: namely, property taxes.
Sometimes called ad valorem taxes, they’re a subject of debate during every budget season when governments set a property tax rate.
Come November, voters in North Carolina will decide on a constitutional amendment that would require the General Assembly to impose limits on how much local property tax revenue can increase.
With possible changes looming, here’s a look at how the Wilmington-area counties could be affected by such
a limit.
How much do property taxes generate?
New Hanover, Brunswick and Pender counties combined to generate about half a billion dollars in property tax revenue during the 2025-26 fiscal year.
For each of the three counties, ad valorem tax revenue makes up more than half of the total general fund -- the primary operating fund that counties use to fund things like employee salaries, parks and public safety. This makes property taxes the single most important revenue source.
With 67.5% of the Pender County’s general fund coming from property tax revenue, it relies on property taxes the most out of the Wilmington-area counties.
What do property taxes fund?
Property tax revenue contributes to a local government’s general fund, which is used to cover salaries, maintenance and most other recurring expenses.
It’s also a major source of funding for schools. According to an analysis from the N.C. Budget and Tax Center, local governments cover about 20% of education costs across the state. In the Cape Fear region, that figure is even higher.
Brunswick and New Hanover counties covered 31% and 32% respectively of public K-12 education costs in the last fiscal year, the analysis stated. Pender County covered 24%.
What's being proposed?
A constitutional amendment will be on the ballot in November 2026 that would require limits on property tax increases. According to Chris McLaughlin with the UNC School of Government, it would be up to the General Assembly to decide what exact limits this entails.
North Carolina currently limits local governments to a rate of $1.50 per $100 valuation. The amendment wouldn’t alter that rate, but rather direct legislators to establish limits on how much property tax revenue can grow.
The N.C. Housing Coalition did a hypothetical, retroactive analysis at how such a change would impact North Carolina counties, using a 2% levy limit as an example. The study found that most counties would lose revenue.
The study stated that Brunswick County would not have been affected if a levy limit was in place during the last fiscal year -- but New Hanover County would have lost $7 million in revenue, while Pender County would have collected around $840,000 less.
How much would homeowners save?
The N.C. Housing Coalition looked at the median tax bill across the state and estimated that the average homeowner would save about $84 per year under a hypothetical 2% levy limit. The study states that large corporate landowners could save millions.
Charlie Kingree is the Pender County and trending topics reporter for the StarNews. He can be reached at ckingree@usatodayco.com.
This article originally appeared on Wilmington StarNews: NC property tax limits could cut millions from local budgets
