Property taxes are skyrocketing. But states are learning that cutting them has major consequences.
Property taxes have skyrocketed across the country, fueling discontent among homeowners and prompting efforts by states to rein in the increases or, in the most extreme cases, phase out the taxes altogether.
But as state legislative sessions wind down, few proposals have become law. Florida ended its session without passing a bill that would reduce tuition taxes for many households. A sweeping measure to end property taxes in Georgia failed, and the state was forced to entertain a more limited bill to limit future property tax increases. In Iowa, the state House and Senate are considering two different tax cut bills but have not yet reached a compromise.
Political enthusiasm for lowering property taxes (more than a dozen states are considering it) but the difficulty of actually doing so reflects difficult budget and economic realities. On average, about 70% of local revenues come from property taxes; That means any effort to reduce these taxes would have serious impacts on municipal budgets, which pay for everything from public safety to park maintenance. In the long run, policies such as limiting property tax increases may make it more difficult for first-time homebuyers to enter the market.
“Good policy does not always mean good policy,” said Manish Bhatt, vice president of state tax policy at the Tax Foundation, a right-leaning think tank.
Property taxes have increased in response to skyrocketing home values across the country. Although effective tax rates vary widely by state, homeowners in both high- and low-tax states have seen their bills balloon.
In New Jersey, which has the nation’s highest property tax rate and high home values, the average homeowner paid more than $9,358 in property taxes in 2024, according to Census Bureau data; This figure is 10% more than $8,432 in 2019.
In Alabama, where property tax rates are among the lowest in the country and home prices are also more modest, the average tax bill is $890 in 2024; That’s up 17% from $609 five years ago.
Neva Butkus, a senior analyst at the left-leaning Institute on Taxation and Economic Policy, said rising tax bills are a particular pain for low- and moderate-income homeowners, as well as those on fixed incomes.
“Property taxes have definitely been a hot topic in recent years because housing prices have increased significantly post-Covid,” Butkus said. “Unlike many forms of taxation, property taxes are not necessarily tied to people’s ability to pay them.”
They’re also a major component of what’s called the “hidden costs” of homeownership, a category that includes other skyrocketing expenses like insurance and homeowners’ association fees.
