An article about a property tax bill approved by the D.C. Council incorrectly stated in some editions yesterday that a proposed increase in the city's homestead exemption would save an average household $266 a year. The actual projected savings from the measure would be $73 a year.

The D.C. Council voted unanimously yesterday to cut property taxes in half for thousands of elderly homeowners in the city and to provide property tax relief worth $73 a year for other homeowners -- the first reduction in seven years.

The tax changes, effective Jan. 1, would first be reflected in the bills homeowners receive next March. The tax relief was delayed to help offset the cost of the measures to the city treasury, estimated at between $11 million and $13 million annually.

The legislation keeps the property tax rate for owner-occupied housing the same, at $1.22 per $100 of assessed value. But it increases the homestead exemption, deducted from the property assessments of all homeowners, from the current $9,000 to $15,000.

Homeowners 65 and older whose primary source of income is Social Security or pension benefits would have to pay only half their property tax bills.

Mayor Marion Barry had proposed no change in property taxes for the 1987 tax year, which begins July 1, but a spokesman said the mayor will sign the measure when it reaches his desk.

Because of rising property assessments, most D.C. homeowners will see an increase in the property tax bills they receive in August. However, the next bill they receive -- in March 1987 -- should be $36 lower than the August bill because of the council's action yesterday on the homestead exemption.

The homestead relief also would be worth a savings of $36 on bills homeowners receive in August 1987, though by that time new and probably higher property assessments will have been set, thus mitigating some of the savings.

Senior citizens affected by the measure would see more dramatic savings, again beginning next March.

City homeowners have "appealed for relief from skyrocketing taxes . . . that are driving some of our residents to sell their homes," said council member John A. Wilson (D-Ward 2), chairman of the council's Finance and Revenue Committee, who proposed the tax plan.

Longtime elderly homeowners have been hurt the most by taxes, particularly when their neighborhoods have changed due to gentrification and property assessments have risen rapidly as a result, Wilson added.

As originally approved by the Finance Committee, the exemption for older homeowners would have applied only if the elderly person's sole source of income was Social Security or pensions, denying it to those with investment or interest income. But the council, on an amendment offered by Wilson, yesterday loosened that restriction to allow the relief if Social Security or pensions make up most of the person's income.

About 24,000 District residents over the age of 65 live in homes they own, according to a committee staff aide, but it could not be immediately determined how many of them would qualify for the exemption under the income-source test.

All District homeowners would be affected by the council's action on the homestead exemption, which is deducted from a homeowners' property assessment before the tax rate -- $1.22 per $100 in assessed value -- is applied.

While the rate has remained constant in recent years, higher assessments have increased the tax bills of most homeowners. Assessments are up an average of 4.9 percent this year, bringing the average residential assessment in the District to $100,971. The tax bill on a house assessed at that level now would be $1,122 annually.

The council's bill keeps the current tax rates of $1.22 per $100 in assessed value for owner-occupied residences, $1.54 for rental residences, $1.82 for hotels and motels, and $2.03 for commercial properties and vacant land. A final vote on the bill is scheduled in two weeks.

In other action, council approved:A $9 million revenue bond issue for a project in the Shaw area on land leased to developer Jeffrey N. Cohen in a controversial arrangement by which the city first bought the land from Cohen. A pilot program for people to earn volunteer service credits that they can use later to get volunteer services for themselves. Bills that require owners of multifamily rental units to have air-conditioning, heating and hot water systems inspected each year.