Understanding State Property Tax Limits
The following post is an excerpt from Understanding State Property Tax Limits, a Lincoln Institute Policy Download.
The United States saw unprecedented growth in housing prices from 2020 to 2022, following a decade during which home values had already appreciated rapidly. In addition to spurring broad concerns about housing affordability, this spike has triggered apprehension among homeowners about an impending increase in property taxes. But changes in property values usually do not lead to commensurate changes in property taxes, because local governments can adjust their property tax rates to offset shifts in their tax base and ensure that tax bills do not grow too quickly. As a result, property taxes have risen since 2020, but far less than housing prices and about the same as inflation. From the first quarter of 2020 to the second quarter of 2025, housing prices grew 51 percent, property taxes per capita grew 26 percent, and inflation grew 25 percent.
Still, rising property values have led policymakers in many states to call for new limits on property taxes. Property tax limits constrain the property tax rate, assessed values, or overall levy. They are intended to keep property tax bills in check and to ease the minds of worried constituents. But they often introduce fiscal and political complexities and can have negative consequences for schools, public safety, and other municipal services. In addition, state-imposed limits on local property taxes reduce local control over budget decisions and constrain the ability of local governments to respond to changing circumstances and voter preferences. They impose a one-size-fits-all limit on very different local governments.
By 2022, all but three states (Hawaii, New Hampshire, and Vermont) had some type of property tax limit. However, the impact of property tax limits on taxpayers and local governments varies widely depending on the specifics of each limit, including the level of allowable growth, exclusions, override options, and the types of local governments covered.
This paper provides an overview of how property tax limits work in the United States by analyzing information newly available in summary tables added to the Lincoln Institute of Land Policy’s Significant Features of the Property Tax® database. It includes information on property tax rate limits, assessment limits, and levy limits; Truth in Taxation measures; and revenue and expenditure limits. The analysis covers tax limits imposed by state governments on local governments, not limits adopted by individual local governments. More detailed state-specific information is available through the Significant Features database.
Tax limits can be complex. Sometimes the caps vary based on property class (residential versus commercial), the type of local government (large cities versus small towns), or other factors. When a state tax limit varies in these ways, our analysis focuses on the laws that affect the largest number of taxpayers and local governments in the state. The appendix provides important caveats to the state-specific information described in the paper.
Download the full report.
Lead image: Horizontal image of four houses and front yards, including a red house with white trim and black shutters. Credit: Zac Gudakov via Unsplash