A North Carolina bill that would scale back property tax exemptions tied to affordable housing could cost taxpayers far more than it saves, with projected net public costs reaching up to $1.3 billion annually, according to a new analysis.
That’s according to a May 2026 impact report from Opportunity South Carolina, which examined House Bill 1042 and its potential effects on roughly 50,000 affordable housing units that could lose eligibility under the proposed changes.
The report estimates the legislation would generate between $50 million and $90 million in recovered property tax revenue, but produce between $560 million and $1.36 billion in offsetting public costs, including homelessness services, healthcare, education disruption, and lost economic activity.
“The bottom-line math: every $1 of recovered property tax revenue under H1042 is offset by an estimated $7 to $15 in increased public service costs,” the report stated.
The analysis projects that approximately 115,000 residents could be displaced as a result of the policy. It notes that North Carolina’s affordable housing shortage—about 38 affordable units per 100 extremely low-income households—would limit relocation options, meaning some displaced residents could become homeless.
The report also estimates that 35,000 to 45,000 schoolchildren could be affected. Citing prior research, it notes that eviction increases the likelihood of grade retention by 34% and is associated with lower graduation outcomes.
In addition, the analysis warns that approximately 62,500 jobs could be at risk, alongside an estimated $2.8 billion reduction in economic activity. It also projects at least 18 months of uncertainty for lenders and investors involved in the state’s affordable housing pipeline.
Teachers, nurses, and emergency responders are among the workers most likely to be affected, as many rely on rent-restricted housing located near their workplaces.
House Bill 1042 was filed April 27, 2026, and would narrow eligibility for North Carolina’s nonprofit affordable housing property tax exemption, requiring properties to requalify under a revised framework.
Separately, a 2025 impact report from Opportunity South Carolina said that nonprofit-partnered developments have preserved more than 20,000 affordable housing units and directed funding toward long-term affordability initiatives across multiple partnerships.
The report also states that these arrangements can expand housing supply without requiring as much direct public funding as fully government-financed developments.
