Rising Property Taxes? See How These States Are Tackling Surging Home Values
While rising home values mean more equity for homeowners, they also have a potential downside: higher property tax bills.
To ease this burden, several states are taking action. Alabama, Wyoming and Kansas have passed laws limiting future property tax increases. In November, Colorado and Georgia residents will vote on similar proposals. Other states are exploring more targeted solutions like exemptions or limitations on assessing value growth.
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All of these proposals are really about what's the desired level of overall taxation and who has to pay it," Realtor.com Chief Economist Danielle Hale said. "Homeowners should remember, and many do remember, that you're paying property taxes to fund local services, including things like schools, parks and local facilities that can make a community a great place to live."
The proposals are a response to a steep rise in home values, which have surged 54% in the past five years, according to the Case-Schiller home price index.
Data from the U.S. Census shows a significant jump in property tax collections. In 2023, state and local governments raked in roughly $760 billion — a 31% increase from 2018. The rise reflects not only new construction but also higher valuations for existing properties.
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State ballots that include property tax measures this year include:
Colorado: In November, voters will decide whether to approve a state constitutional amendment to limit total statewide property tax revenue growth to 4% annually, based on the previous year's collection.
Georgia: Voters will determine whether to permit assessment on residential property values to be capped at the inflation rate.
New Mexico: Voters will consider two ballot measures that would give greater property tax exemptions to veterans and disabled veterans.
Arizona: Voters will decide whether to allow property owners to apply for a property tax refund if local governments fail to enforce nuisance ordinances, such as bans on public camping or panhandling.
Missouri: Voters will decide whether to exempt child care facilities from property taxes.
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Some states already have passed laws that limit property tax increases this year. Alabama caps increases in assessed value on residential and commercial property to 7% of the previous year, and Wyoming has a 4% cap on year-to-year property tax increases on residential structures and land.
But property taxes are a complex beast. Assessments and collections are typically handled locally, with rules varying widely across states. This makes it challenging for lawmakers to implement changes, and past attempts haven't always been successful.
Washington state, for example, has capped annual property tax revenue increases at 1% since 2001. While this aimed to control homeowner costs, it's led to budget struggles for some counties. Rising service costs outpace the limited revenue growth, straining local finances.
Similarly, a 1982 ordinance in Georgia's Muscogee County froze property taxes for existing homeowners. While intended to benefit long-term residents, it created an uneven playing field. Longtime owners now pay significantly less than newer residents, raising fairness concerns.
These examples highlight the complexities of property tax reform. While efforts are underway to ease the burden on homeowners, finding solutions that balance fairness and sustainable government funding remains challenging.
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