Report Finds New Homebuyers in Some Cities Pay Double the Property Taxes of Their Neighbors

The Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence released the annual 50-State Property Tax Comparison Study, the most comprehensive annual analysis of property taxes in the United States that offers a detailed, city-by-city analysis of property tax rates for the 2025 tax year. 

This annual study documents the wide range of property tax rates in more than 100 US cities and helps explain why they vary so much. The report identifies four key factors that explain most of the variation in property tax rates: property tax reliance, property values, the level of local government spending, and classification (whether cities tax homesteads at lower rates than they tax other types of property). 

The report shows that assessment limits, which restrict how fast a property’s taxable value can grow from year to year regardless of what is happening in the broader housing market, continue to drive inequities. This happens because when a home is sold, the taxable value typically resets to the current market value. Therefore, new buyers immediately face the full tax burden while neighbors in similar homes may pay taxes on a fraction of the actual market value. The tax inequities created by assessment limits only compound over time. The longer a homeowner stays in their house, and the faster local home values rise, the wider the gap grows. It is especially extreme in cities with hot real estate markets, like Miami, where the owner of a newly purchased, median-valued home would face a tax bill 3.2 times higher than would the owner of an equally valued home purchased in 2012: $10,024 versus $3,166. 

“Assessment limits are often presented as straightforward tax relief but our annual analysis continues to show that assessment limits have a number of negative consequences––they create large disparities in tax bills for similar homes and shift the burden to new homeowners,” said Adam H. Langley, associate director of Tax Policy at the Lincoln Institute of Land Policy. “As more states look to adopt these policies, our data shows clearly what the trade-offs are and who ends up paying the price.”

The study also highlights an increase in property tax classification in recent years, whereby office buildings face higher effective tax rates than do homesteads. An analysis of the largest cities in each state shows that commercial properties experience an effective tax rate that is 82 percent higher than the rate for homesteads, on average. 

“Property taxes are the backbone of local government finance, and this report gives policymakers, residents, and businesses the clearest possible picture of how these taxes actually work in practice,” said Mark Haveman, executive director at the Minnesota Center for Fiscal Excellence. “What stands out year after year is how much the design of the property tax system matters. These choices have real consequences for housing affordability, business competitiveness, and fiscal equity, and understanding each of these factors is the first step toward improving them.”

The analysis of the largest city in each state shows that the average effective tax rate on a median valued homestead was 1.213 percent in 2025 for this group of 53 cities. At that rate, a home worth $200,000 would owe $2,426 in property taxes (1.213 percent multiplied by $200,000). On the high end, three cities have effective tax rates at least two times higher than the average—Detroit, Aurora (IL), and Portland (OR). Conversely, seven cities have tax rates half the study average or less—Honolulu, Billings (MT), Denver, Salt Lake City, Boston, Charleston (SC), and Huntsville (AL).

Taking a closer look at the cities with the lowest property tax rates, Billings had by far the largest drop in property taxes for a median-valued home in this year’s report (37 percent). Montana created a graduated property tax structure in 2025 with three tax brackets, which slashed effective tax rates on homes worth $400,000 or less, with smaller decreases on homes worth up to $1.5 million, and increases on the most valuable homes. 

The study also includes estimates for each city’s effective tax rates and tax bills for commercial, industrial, and apartment properties. It shows how taxes changed in each city from 2024 to 2025, the effect of policies that shift the tax burden from homesteads to commercial properties and apartment buildings, and the level of tax inequities created by assessment limits.

To take a closer look at the property tax system in the United States and understand the implications for cities, read the 50-State Property Tax Comparison Study on the Lincoln Institute’s website.