Property Tax Relief & Reform

The Issue

Property Values Are Increasing

Property values have skyrocketed in recent years, rising almost 27 percent faster than inflation since 2020, which yields dramatically higher property taxes in jurisdictions that fail to adjust millages (rates) downward. In just two years, the average sales price of a US home soared from $371,100 to $525,100. Legitimate taxpayer discontent over high property taxes is fueling a movement to significantly curtail or even eliminate the property tax in states like Colorado, Connecticut, Florida, Georgia, Indiana, Iowa, Kansas, Maryland, Montana, Nebraska, New Hampshire, New Jersey, North Carolina, North Dakota, Pennsylvania, South Dakota, Texas, and Wyoming.

Common but Flawed Proposals

Some Proposals—Including Assessment Limits and Abolishing Property Taxes—Create More Problems Than They Solve

Many of the property tax reform proposals offered by policymakers, like assessment limits and tax swaps (including full abolition of the property tax), create more problems than they solve, distorting property markets and undermining long-term housing affordability. Property taxes are the primary tool for financing local governments and the single largest source of state and local revenue in the US, helping fund schools, roads, police, and other services. The property tax plays an important role in public finance and is more efficient, pro-growth, aligned with benefits received, and generally better suited to municipal finance than any of the alternatives.

A Better Solution for Property Tax Relief

Property Tax Levy Limits

A better path forward would focus on sound tax policy solutions like narrowly tailored circuit breakers to help ensure that low-income families are not priced out of their homes and well-designed property tax levy limits that provide homeowners with much-needed relief from soaring property tax bills without the harms associated with other policy responses. Property tax levy (or revenue) limits are concerned with the actual amount of revenue raised by a taxing authority, imposing rollbacks or reductions to ensure that collections do not increase in aggregate above a given amount.

As the most effective, neutral, and responsible tool for states looking for property tax relief, well-designed property tax levy limits:

✔️ Constrain the growth of property taxes without distorting housing markets, undercutting economic growth, or shifting burdens onto new homeowners.

✔️ Prevent unlegislated tax increases that result from appreciation in property values, without anyone—local officials or taxpayers—ever casting a vote to raise taxes.

✔️ Keep property tax burdens in check without cutting the vital linkage between related assessed values (market value) and property owners’ tax liabilities (taxation).

Lawmakers can constrain the growth of property taxes without creating new problems. But the details matter.

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