Amends GS 105-277.1C, which provides for a property tax homestead exclusion for disabled veterans, set at the first $45,000 of appraised value of the residence. Revises the exclusion to provide for a total exemption of the appraised value of the residence. Adds the following new provisions. Requires county tax collectors to annually notify the Secretary of Revenue (Secretary) of the county's total hold harmless amount, defined as the sum of the hold harmless amount (the appraised value of property excluded multiplied by the applicable local tax rate) for all property excluded from taxation in the county and the hold harmless amount of all property excluded from taxation in cities located in the county. Directs the Secretary to annually distribute each county's total hold harmless amount on or before December 31. Failure to do so bars reimbursement. Requires counties to distribute funds received attributable to its cities or other unit of government or special district for which it collected taxes. Requires the Secretary to draw on individual income tax collections under Part 2, Article 4 to pay for the reimbursement and administrative costs.

Effective for taxable years beginning on or after July 1, 2026.