Property Tax Fundamentals

This section covers the basic property tax structure established by each state, including definitions of real property; treatment of personal property; and transfer charges imposed when properties change hands. States may also set limits on rates, on assessment increases (for example, some states freeze property value until property changes hands), on the amount the property tax levy may increase from year to year, and on the total revenues collected or expenditures made during the year. This section includes local property tax rates, as reported by the states.

 

The Property Tax Base

The property tax base starts with monetary values that are placed on taxable property by the taxing authority. All states recognize market value (also sometimes called true value, just value, or actual value) as a standard for assessment, though not all states strictly apply that standard. Many states do not allow taxation of the full value of property, but rather apply assessment ratios to reduce values before the tax rate is applied. Some states classify property by its use, with different tax rates or assessment ratios for different classes of property.

 

Property Tax Relief and Incentive Programs

All states have tax provisions to encourage particular land uses and to provide property tax relief to selected classes of owners. Property tax relief and incentive programs are grouped here according to their objectives and structure. They include tax relief to residential property owners, provisions to encourage economic development, to reduce taxes on certain types of property (e.g., agricultural or open space), and programs to encourage specific types of property improvement. They may offer relief by applying a different value standard (e.g., use value) or through exemptions, credits, or deferral of payments.