A bill requested by the Department of Revenue (DOR) changing notice requirements and limiting effective dates for changes to local real estate excise taxes (REET) and lodging taxes passed the House. The amended bill (HB 2650) requires 60 days’ notice for local REET changes and 75 days’ notice for changes to local lodging taxes, except for those credited against the state tax.

We are hopeful that the Senate committee amends the bill to add October 1 as an additional effective date for lodging tax changes, in addition to the first day of January, April, and July as currently stated in the bill.

Date to remember

HB 2650 is scheduled for a hearing in the Senate Ways & Means Committee on Thursday, February 26, at 1:30 pm.

Bill changing notification requirements for REET and lodging tax in Rules Committee

February 16, 2026

A bill requested by the Department of Revenue to require 60 days’ notice for changes to local real estate excise taxes (REET) and 75 days’ notice for lodging tax rate changes is waiting on further action. The amended bill (HB 2650) passed out of the House Finance Committee on February 6 and is currently in the House Rules Committee.

The current version requires 60 days’ notice for changes to REET, which could take effect on the first day of the quarter in January, April, July, or October. Changes to lodging tax, other than those credited against the state sales tax, would require 75 days’ notice and could only take effect on the first day of January, April, or July, which is the same limitation applied to local sales tax changes.

AWC would prefer that these changes to lodging taxes could also take effect on October 1.

Bill changes notification requirements for REET & lodging tax

February 2, 2026

A bill requested by the Department of Revenue (DOR) to require 75 days’ notice for changes to local real estate excise taxes (REET) or lodging tax rates is scheduled for a hearing.

As introduced, HB 2650 would require new local REET, lodging taxes, and tourism promotion fees or rate changes to take effect on the first day of the first three quarters (January 1, April 1, or July 1) and require cities to provide at least 75 days’ notice to DOR.

Currently, notice of local REET changes must be provided 60 days prior to taking effect, and lodging taxes and tourism promotion fees do not have limitations. These are new limitations on local flexibility to adopt local option taxes, but these notice requirements are similar to the notification required for local option sales taxes. These changes were proposed by DOR because additional time would help to provide notice to affected taxpayers.

Cities support an expected amendment that would retain the option to enact a new local tax effective October 1 since most new local option tax legislation does not take effect until after the July 1 notice window, which means the first available local option would otherwise be six months later on January 1. The amendment would also retain the existing 60-day notice requirement for REET, which cities think is sufficient.

The bill also cleans up language related to documentation required to qualify for a targeted urban area local tax deferral for housing projects on underdeveloped property.

Dates to remember

HB 2650 is scheduled for a hearing in the House Finance Committee on Tuesday, February 3, at 8 am.