The Lincoln Institute of Land Policy’s 50 State Property Tax Comparison Study, produced in partnership with the Minnesota Center for Fiscal Excellence, is now available at the Significant Features of the Property Tax subcenter of the Lincoln Institute website. Based on 2013 data, the study analyzes effective property tax rates in each state’s largest city, the District of Columbia, the 50 largest U.S. cities, and one rural area in each states.
Effective property tax rates measure the actual tax payment as a percentage of market value. They provide a more accurate measure of the tax burden than nominal rates that may be applied to a percentage of full value because of statutory provisions or local assessment practices.
The Lincoln Institute and the Minnesota Center for Fiscal Excellence have produced the 50-state comparison study for the last four years. The 2013 data shows a wide range of effective tax rates. Bridgeport, Connecticut continues to impose the highest taxes on median-value homes in urban cities, with an effective rate above 4 percent. The lowest rate, in Columbia, South Carolina, is slightly above .6 percent. The decline in real values in Detroit leaves it with high effective tax rates, but a new revaluation initiative in the city may reduce that rate in the future. The New England region, with its heavy reliance on property taxes, has the highest effective homestead rates, but the Midwest leads with the highest effective rates on commercial property.
-- There was no change between 2012 and 2013 in the top 5 cities with the highest property tax bills on a median-value home. Bridgeport was highest, followed by Newark, Aurora (IL) Philadelphia, and Burlington (VT). As a share of home value, the cities with the highest effective tax rates on a median value home were Bridgeport, Aurora (IL), Detroit, Philadelphia, and Milwaukee (See table 23).
-- There was one change in the 5 cities with the lowest property tax on a median-value home, as Indianapolis replaced Atlanta. In 2013, Columbia (SC) had the lowest rate, followed by Charleston (WV), Birmingham, Cheyenne, and Indianapolis (See table 23).
-- The very low property values in Detroit have a big impact on how the city’s property taxes compare to other cities. The property tax on a median value home in Detroit was $2,167 in 2013, which was 35 percent below the national average and 19th lowest among the largest cities in each state. However, the median home value in Detroit was only $65,167, less than half of the next lowest city (Buffalo - $132,000 ). Despite a relatively low property tax bill of $2,167, very low home values in Detroit drive up the effective property tax rate on a median value home in Detroit to 3.325 percent ($2,167 / $65,167). This rate is twice the national average and 3rd highest among the cities (See table 23).
-- Some cities tax business property much more heavily than owner-occupied primary residences. The study compares the effective tax rate on a $1 million commercial property’s land and buildings to the rate on a median value home. In New York City, the commercial rate was 4.98x higher than the rate on a median value home. The next highest cities were Boston, Columbia (SC), Denver, and Honolulu. The only cities to tax homestead property more heavily than commercial property were Bridgeport, CT; Louisville, KY; and Las Vegas, NV (See table 19).
-- The cities with the highest effective tax rates on commercial property were Detroit, Des Moines, Philadelphia, Providence, and then either Bridgeport or Minneapolis depending on the building’s value. The cities with the lowest commercial tax rates were Cheyenne, Honolulu, Seattle, Virginia Beach, and Las Vegas (See table 25).
-- For industrial property, the cities with the highest effective tax rates were Des Moines, Columbia (SC), Detroit, Memphis, and Jackson (MS). The cities with the lowest industrial tax rates were Virginia Beach, Honolulu, Cheyenne, Wilmington, and Fargo (See table 26).
-- Some cities tax apartment buildings more heavily than owner-occupied residences. In New York City, the effective tax rate on apartments was 5.47x higher than on homes. The next highest cities were Columbia (SC), Charleston (WV). Birmingham, and Boise (See table 20). Since property tax burdens can be shifted to tenants through higher rent, renters in these cities may bear a larger relative share of the property tax burden.