50-State Property Tax Comparison Study
The annual 50-state property tax comparison study, a partnership of the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence, reports on relative property tax burdens across the United States. We compare effective property tax rates (that is, total tax divided by total value) for four classes of property located in the largest city of each state (plus an additional city for Illinois and New York) and the District of Columbia, the largest fifty cities in the United States, and a rural area for each state. We select cities for our rural analysis based on a rural-urban classification continuum developed by the U.S. Department of Agriculture. Cities included in the rural analysis must be county seats with populations of 2,500 to 10,000 located outside of metropolitan statistical areas.
This study is most useful when used in connection with other information about state and local tax structures. Some locations have relatively high property tax levies because those local governments are more dependent on “own-source” revenue (revenue they raise themselves) or have limited non-property tax options available to them. Other states have higher income and sales taxes in part to finance a greater share of the cost of local government. Also, the property tax on a selected class of property may be relatively high or low due to state or local policies designed to redistribute property tax burdens across the classes of property through exemptions, differential assessment rates, or other classification schemes.
We continue to use fixed-value examples to facilitate comparisons with earlier studies. Fixed values enable comparisons of the tax burden resulting from each state's tax structure, unaffected by local real estate markets. However, fixed values for homestead property are often not representative of typical home values in a particular community. Therefore, this study also compares homeowner tax burdens for the median-value home in each large (i.e. “non-rural”) city.
Importantly, this year we have made a change to the methodology in our median home value analysis. Beginning with this edition of the study we are using American Community Survey data on median home values as it provides more robust information while allowing for more precise geographical detail. Readers should make time-trend comparisons of tax burdens on median-valued homes before and after this methodological change with care.
This study assumes that the “true market value” of each of several parcels of property is the same in all 124 locations studied. Because the "assessed value" of property varies from state to state, sometimes significantly, our tax calculations necessarily account for the effects of local assessment practices as well as statutory tax provisions. This involves the use of the “sales ratio” statistic—the comparison of actual sales prices to assessed values.
The report also includes estimates of the effect that relief programs which freeze or limit increases in home value and/or property taxes at the individual level have on homeowner property tax burdens. We first added this feature to the study in our payable 2012 edition.
Data for property tax calculations were collected in one of two ways. Where possible, property tax data was collected directly from various state and local websites. Where such data was not available, we calculated property taxes using a contact-verification approach in which state or local tax experts were asked to provide information and provided verification when necessary.
This report contains a “Frequently Asked Questions” section, designed to provide interested readers with additional clarity about the contents of the report, and a section that presents urban and rural results for all classes of property by U.S. Census Bureau geographic region. This section also provides information on the highest and lowest property tax burdens for individual cities in our largest fifty city and urban city sets and includes an analysis of several key features such as classification systems, disparities between homestead and non-homestead properties (particularly business property), the effects of assessment limitations, and personal property assumptions. A complete set of comparison tables referenced in this report are included.