50-State Property Tax Comparison Study: For Taxes Paid in 2022

Executive Summary

By Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence

August 2023

As the largest source of revenue raised by local governments, a well-functioning property tax

system is critical for promoting municipal fiscal health. This report documents the wide range of

property tax rates in more than 100 U.S. cities and helps explain why they vary so widely. This

context is important because high property tax rates usually reflect some combination of: 1)

heavy property tax reliance with low sales and income taxes; 2) low home values that drive up

the tax rate needed to raise enough revenue; or 3) higher local government spending and better

public services. In addition, some cities operate in an environment where the state uses property

tax classification, which can result in considerably higher tax rates on business and apartment

properties than on homesteads.

This report provides the most meaningful data available to compare cities’ property taxes by

calculating the effective tax rate: the tax bill as a percent of a property’s market value. Data are

available for 74 large U.S. cities and a rural municipality in each state, with information on four

different property types (homestead, commercial, industrial, and apartment properties), and

statistics on both net tax bills (i.e., $3,000) and effective tax rates (i.e., 1.5 percent). These data

have important implications for cities because the property tax is a key part of the package of

taxes and public services that affects cities’ competitiveness and quality of life.

Why Property Tax Rates Vary Across Cities

To understand why property tax rates are high or low in a particular city, it is critical to know

why property taxes vary so much across cities. This report uses statistical analysis to identify

four key factors that explain most of the variation in property tax rates.

Property tax reliance is one of the main reasons why tax rates vary across cities. While some

cities raise most of their revenue from property taxes, others rely more on alternative revenue

sources. Cities with high local sales or income taxes do not need to raise as much revenue from

the property tax, and thus have lower property tax rates on average. For example, this report

shows that Bridgeport (CT) has one of the highest effective tax rates on a median valued home,

while Birmingham (AL) has one of the lowest rates. However, in Bridgeport, city residents pay

no local sales or income taxes, whereas Birmingham residents pay both sales and income taxes to

local governments. Consequently, despite the fact that Bridgeport has much higher property

taxes, total local taxes are nearly 50 percent higher in Birmingham ($3,318 vs. $2,281 per

capita).

Property values are the other crucial factor explaining differences in property tax rates. Cities

with high property values can impose a lower tax rate and still raise at least as much property tax

revenue as a city with low property values. For example, consider San Francisco and Detroit,

which have the highest and lowest median home values in this study. After accounting for

assessment limits, the average property tax bill on a median valued home for the large cities in

this report is $3,489. To raise that amount from a median valued home, the effective tax rate

would need to be 20 times higher in Detroit than in San Francisco—5.03 percent versus 0.27

percent.

Two additional factors that help explain variation in tax rates are the level of local government

spending and whether cities tax homesteads at lower rates than other types of property (referred

to as “classification”). Holding all else equal, cities with higher spending will need to have

higher property tax rates. Classification imposes lower property taxes on homesteads, but higher

property taxes on business and apartment properties.

Homestead Property Taxes

There are wide variations across the country in property taxes on owner-occupied primary

residences, otherwise known as homesteads. An analysis of the largest city in each state shows

that the average effective tax rate on a median-valued homestead was 1.32 percent in 2022 for

this group of 53 cities.

At that rate, a home worth $200,000 would owe $2,642 in property taxes

(1.32% x $200,000). On the high end, there are four cities with effective tax rates that are at least

two times higher than the average—Bridgeport (CT), Aurora (IL), Newark, and Detroit.

Conversely, there are seven cities where tax rates are half of the study average or less—

Honolulu, Charleston (SC), Boston, Denver, Salt Lake City, Boise, and Cheyenne (WY).

Highest and Lowest Effective Property Tax Rates on a Median Valued Home (2022)

Highest Property Tax Rates Lowest Property Tax Rates

1 Detroit (MI) 3.21%

Why: Low property values 49

Salt Lake City (UT) 0.58%

Why: Low property tax reliance,

Classification shifts tax to business

2 Newark (NJ) 3.20%

Why: High property tax reliance

Denver (CO) 0.52%

Why: Low property tax reliance,

classification, high home values

3 Aurora (IL) 3.04%

Why: High property tax reliance

Boston (MA) 0.49%

Why: High home values,

Classification shifts tax to business

4 Bridgeport (CT) 3.04%

Why: High property tax reliance

Charleston (SC) 0.44%

Why: Classification shifts tax to

business, High home values

5 Portland (OR) 2.59%

Why: Assessment limit shifts

tax to newly built homes

Honolulu (HI) 0.29%

Why: High home values, low local

gov’t spending, classification

Note: Data for all cities: Figure 2 (page 19), Appendix Table 1a (page 51), and Appendix Table 2a (page 59).

The average effective tax rate for these 53 cities fell 0.6 percent between 2021 and 2022, from

1.330 percent to 1.321 percent. From 2021 to 2022, significantly more cities had decreases (33)

than increases (19). Providence led the way with an effective tax rate decrease of over 35 percent

from 2021 to 2022, due to a 27 percent decrease in the city’s mill rate and an increase in the

city’s homestead exemption from 40 to 45 percent of value.

The largest cities in each state includes 53 cities, because it includes Washington (DC) plus two cities in Illinois

and New York since property taxes in Chicago and New York City are so different than the rest of the state.

Note that differences in property values across cities mean that some cities with high tax rates

can still have low tax bills on a median valued home if they have low home values, and vice

versa. For example, Los Angeles and Wichita (KS) have similar effective tax rates of 1.16 and

1.17 percent on median valued homes, but because the median valued home is worth so much

more in Los Angeles ($812k vs. $166k), the tax bill is far higher in Los Angeles (3rd highest)

than in Wichita (48th highest).

Effective tax rates rise with home values in about half of the cities (24 of 53), and this pattern has

a progressive impact on the property tax distribution. Usually, this relationship occurs because of

homestead exemptions that are set to a fixed dollar amount. For example, a $20,000 exemption

provides a 20 percent tax cut on a $100,000 home, a 10 percent cut on a $200,000 home, and a 5

percent cut on a $400,000 home. The increase in effective tax rates with home values is steepest

in Boston, Atlanta, Washington (DC), New Orleans, and Philadelphia.

Commercial Property Taxes

There are also significant variations across cities in commercial property taxes, which include

taxes on office buildings and similar properties. In 2022, the effective tax rate on a commercial

property worth $1 million averaged 1.836 percent across the largest cities in each state. The

highest rates were in Detroit and Chicago, where effective tax rates remain more than twice the

average for these 53 cities. On the other hand, rates were less than half of the average in

Cheyenne (WY), Boise, Charlotte, Seattle, and Honolulu.

Highest and Lowest Effective Property Tax Rates on a $1 Million Commercial Property

Highest Property Tax Rates Lowest Property Tax Rates

Chicago (IL) 4.00%

Why: High local gov’t spending,

Classification shifts tax to business

Honolulu (HI) 0.91%

Why: High property values,

Low local gov’t spending

Detroit (MI) 3.91%

Why: Low property values 50

Seattle (WA) 0.79%

Why: High property values,

Low property tax reliance

Providence (RI) 3.34%

Why: High property tax reliance 51

Charlotte (NC) 0.76%

Why: Low property tax reliance

Bridgeport (CT) 3.04%

Why: High property tax reliance 52

Boise (ID) 0.66%

Why: Low local gov’t spending,

High property values

Des Moines (IA) 2.86%

Why: Low property values,

High property tax reliance

Cheyenne (WY) 0.60%

Why: Low property tax reliance

Note: Analysis includes an additional $200k in fixtures (office equipment, etc.).

Data for all cities: Figure 3 (page 24), Appendix Table 1b (page 54), and Appendix Table 3a (page 75).

The average commercial tax rate for the 53 cities fell 1.4 percent between 2021 and 2022, as 33

cities saw declines versus 19 cities with increases.

Preferential Treatment for Homeowners

Many cities have preferences built into their property tax systems that result in lower effective

tax rates for certain classes of property, with these features usually designed to benefit

homeowners. The “classification ratio” describes these preferences by comparing the effective

tax rate on land and buildings for two types of property. For example, if a city has a 3.0 percent

effective tax rate on commercial properties and a 1.5 percent effective tax rate on homestead

properties, then the commercial-homestead classification ratio is 2.0 (3.0% divided by 1.5%).

An analysis of the largest cities in each state shows an average commercial-homestead

classification ratio of 1.83, meaning that on average commercial properties experience an

effective tax rate that is 83 percent higher than homesteads. About 30 percent (16 of 53) have

classification ratios above 2.0, meaning that commercial properties face an effective tax rate that

is at least double that for homesteads led by Charleston (SC) at 5.7.

Preferential Treatment of Homeowners: Ratio of Effective Tax Rate on

Commercial and Apartment Properties to the Rate on Homestead Properties (2022)

Commercial vs. Homestead Ratio

Apartment vs. Homestead Ratio

Charleston (SC)

5.69

Charleston (SC)

5.69

Boston (MA)

New York (NY)

4.24

Denver (CO)

4.11

Jacksonville

(

FL)

3.44

Honolulu (HI)

Indianapolis (IN)

Providence (RI)

Jackson (MS)

Note: Commercial-homestead ratio compares rate on $1 million commercial building to median valued home.

Apartment-homestead ratio compares rate on $600k apartment building to median valued home.

Ratios compare taxes on real property and exclude personal property.

Data for all cities: Figures 6a, 6b (pages 37–38), Appendix Table 6a (page 101), and Appendix Table 6b (page 103).

The average apartment-homestead classification ratio is significantly lower (1.44), with

apartments facing an effective tax rate that is 44 percent higher than homesteads on average.

There are seven cities where apartments face an effective tax rate that is more than double that

for homesteads, with Charleston (SC) as the biggest outlier where the rate for apartments is 5.7

times higher than the rate on a median valued home. It is important to note that while renters do

not pay property tax bills directly, they do pay property taxes indirectly since landlords are able

to pass through some or all of their property taxes in the form of higher rents.

There are four types of statutory preferences built into property tax systems that can lead to

lower effective tax rates on homesteads than other property types: the assessment ratio, the

nominal tax rate, exemptions and credits, and differences in assessment limits. In total, 40 of the

53 cities have statutory preferences that favor homesteads over commercial properties. Above

that, 21 of these 40 cities benefit homeowners using at least two of these four statutory

preferences in 2022. In 10 cities, preferential treatment for homeowners is delivered through

exemptions or credits alone, while in 9 cities preferences are delivered exclusively through

differences in assessment ratios or nominal tax rates. Similarly, 36 cities have statutory

preferences favoring homesteads relative to apartments, but only 12 offer more than one

preference. Eight cities have preferential assessment ratios and/or nominal tax rates only, while

16 cities offer homestead exemptions or credits alone.

Property Tax Assessment Limits

Since the late 1970s, an increasing number of states have adopted property tax limits, including

constraints on tax rates, tax levies, and assessed values. This report accounts for the impact of

limits on tax rates and levies implicitly, because of how these laws impact cities’ tax rates, but it

is necessary to use an explicit modeling strategy to account for assessment limits.

Assessment limits typically restrict growth in the assessed value for individual parcels and then

reset the taxable value of properties when they are sold. Therefore, the level of tax savings

provided from assessment limits largely depends on two factors: how long a homeowner has

owned her home and appreciation of the home’s market value relative to the allowable growth of

its assessed value. As a result, assessment limits can lead to major differences in property tax

bills between owners of nearly identical homes based on how long they have owned their home.

This report estimates the impact of assessment limits for median valued homes by calculating the

difference in taxes between newly purchased homes and homes that have been owned for the

average duration in each city. For example, in Los Angeles, the average home has been owned

for 15 years and the median home value is $812,800. Because of the state’s assessment limit,

someone who has owned their home for 15 years would pay 53.8 percent less in property taxes

than the owner of a newly purchased home, even though both homes are worth $812,800.

The largest discrepancy is in Jacksonville (FL), where the owner of a newly purchased, median-

valued home would face an effective tax rate 64 percent higher than the owner of an equally

valued home purchased in 2010. Assessment limits reduce taxes by 60 percent or more in two

other cities (Miami and Sacramento), 50 to 60 percent in seven cities (New York City, five

California cities, and Phoenix), 40 to 50 percent in another five cities, and 30 to 40 percent in an

additional two cities. Of the 30 cities in this report that are affected by parcel-specific assessment

limits, new homeowners face higher property tax bills than existing homeowners in 29 cities and

their tax bills are at least 30 percent higher in 17 of those cities. Only Chicago, which essentially

resets every three years, did not shelter any homeowner value in 2022. In Texas, where prior

versions of this report have usually found that the assessment limit law did not have an effect on

the median value home with average duration of ownership, all seven cities sheltered some

value—ranging from El Paso at 6.2 percent to Austin at 24.9 percent.

Conclusion

Property taxes range widely across cities in the United States. This report not only shows which

cities have high or low effective property tax rates, but also explains why. Cities will tend to

have higher property tax rates if they have high property tax reliance, low property values, or

high local government expenditures. In addition, some cities use property tax classification,

which can result in considerably higher tax rates on business and apartment properties than on

homesteads. By calculating the effective property tax rate, this report provides the most

meaningful data available to compare cities’ property tax burdens. These data have important

implications for cities because the property tax is a key part of the package of taxes and public

services that affects cities’ competitiveness and quality of life.

Property Taxes on Median Valued Home for Largest City in Each State (2022)

0.29%

0.44%

0.49%

0.52%

0.58%

0.62%

0.64%

0.68%

0.72%

0.73%

0.78%

0.81%

0.85%

0.89%

0.92%

0.93%

0.94%

1.01%

1.09%

1.12%

1.13%

1.14%

1.16%

1.17%

1.21%

1.22%

1.23%

1.24%

1.25%

1.26%

1.33%

1.35%

1.36%

1.44%

1.52%

1.56%

1.61%

1.75%

1.93%

2.01%

2.09%

2.13%

2.19%

2.59%

3.04%

3.20%

3.21%

0 1,920 3,840 5,760 7,680 9,600 11,520 13,440

0 0.0066054 0.0132108 0.0198162 0.0264216 0.033027 0.0396324

0.0462378

HI: Honolulu (53, 42)

SC: Charleston (52, 49)

MA: Boston (51, 25)

CO: Denver (50, 33)

UT: Salt Lake City (49, 35)

ID: Boise (48, 30)

WY: Cheyenne (47, 50)

AL: Birmingham (46, 53)

NC: Charlotte (45, 40)

DC: Washington (44, 11)

WA: Seattle (43, 8)

RI: Providence (42, 38)

TN: Nashville (41, 32)

WV: Charleston (40, 51)

VA: Virginia Beach (39, 28)

GA: Atlanta (38, 22)

MT: Billings (37, 34)

LA: New Orleans (36, 36)

PA: Philadelphia (35, 44)

AZ: Phoenix (34, 18)

IN: Indianapolis (33, 47)

KY: Louisville (32, 41)

NV: Las Vegas (31, 16)

AR: Little Rock (30, 46)

CA: Los Angeles (29, 3)

KS: Wichita (28, 48)

ME: Portland (27, 10)

ND: Fargo (26, 29)

NY: New York City (25, 4)

OK: Oklahoma City (24, 39)

MS: Jackson (23, 52)

AK: Anchorage (22, 13)

DE: Wilmington (21, 37)

FL: Jacksonville (20, 27)

MN: Minneapolis (19, 17)

MO: Kansas City (18, 31)

SD: Sioux Falls (17, 24)

NM: Albuquerque (16, 23)

NY: Buffalo (15, 43)

IL: Chicago (14, 12)

TX: Houston (13, 19)

OH: Columbus (12, 20)

NH: Manchester (11, 9)

IA: Des Moines (10, 26)

NE: Omaha (9, 14)

VT: Burlington (8, 6)

MD: Baltimore (7, 15)

WI: Milwaukee (6, 21)

OR: Portland (5, 1)

CT: Bridgeport (4, 7)

IL: Aurora (3, 5)

NJ: Newark (2, 2)

MI: Detroit (1, 45)

Effective Tax Rate Tax Bill

Tax Relative to U.S. Average

($3,841)

1.5x

($5,761)

0.5x

($1,920)

Tax Relative to U.S. Average

2.5x

($9,602)

($7,681)

(Rate Rank, Bill Rank)

3.5x

($13,442

3.0x

($11,522)

Commercial Property Taxes for Largest City in Each State (2022)

Effective Tax Rate for $1-Million Valued Property (plus $200k in Fixtures)

0.60%

0.66%

0.76%

0.79%

0.91%

0.94%

1.00%

1.09%

1.12%

1.13%

1.17%

1.19%

1.24%

1.25%

1.28%

1.31%

1.34%

1.35%

1.41%

1.42%

1.46%

1.49%

1.53%

1.54%

1.63%

1.78%

1.83%

1.86%

1.89%

1.90%

1.98%

2.02%

2.04%

2.10%

2.14%

2.38%

2.45%

2.57%

2.59%

2.63%

2.67%

2.72%

2.73%

2.85%

2.86%

3.04%

3.34%

3.91%

4.01%

WY: Cheyenne (53)

ID: Boise (52)

NC: Charlotte (51)

WA: Seattle (50)

HI: Honolulu (49)

VA: Virginia Beach (48)

UT: Salt Lake City (47)

MT: Billings (46)

ND: Fargo (45)

DE: Wilmington (44)

NV: Las Vegas (43)

CA: Los Angeles (42)

DC: Washington (41)

ME: Portland (40)

TN: Nashville (39)

SD: Sioux Falls (38)

AL: Birmingham (37)

KY: Louisville (36)

OK: Oklahoma City (35)

AR: Little Rock (34)

NY: New York City (33)

NH: Manchester (32)

AK: Anchorage (31)

FL: Jacksonville (30)

GA: Atlanta (29)

NM: Albuquerque (28)

MA: Boston (27)

SC: Charleston (26)

NY: Buffalo (25)

PA: Philadelphia (24)

WV: Charleston (23)

OH: Columbus (22)

AZ: Phoenix (21)

LA: New Orleans (20)

VT: Burlington (19)

NE: Omaha (18)

TX: Houston (17)

CO: Denver (16)

WI: Milwaukee (15)

MN: Minneapolis (14)

KS: Wichita (13)

OR: Portland (12)

MD: Baltimore (11)

NJ: Newark (10)

IN: Indianapolis (9)

MS: Jackson (8)

IL: Aurora (7)

MO: Kansas City (6)

IA: Des Moines (5)

CT: Bridgeport (4)

RI: Providence (3)

MI: Detroit (2)

IL: Chicago (1)

Tax Relative to U.S. Average

0.5x

1.5x

Commercial-Homestead Classification Ratio for Largest City in Each State (2022)

Note: Commercial-homestead ratio compares rate on $1 million commercial building to median valued home.

0.904

0.906

0.957

0.994

1.000

1.009

1.011

1.050

1.060

1.078

1.079

1.081

1.083

1.087

1.111

1.140

1.195

1.232

1.276

1.408

1.455

1.486

1.560

1.575

1.600

1.665

1.721

1.777

1.803

1.832

1.892

1.960

2.074

2.095

2.152

2.165

2.171

2.183

2.185

2.390

3.153

3.443

3.460

3.616

3.716

4.110

4.356

5.690

0.0 1.0 2.0 3.0 4.0 5.0 6.0

WY: Cheyenne (53)

VA: Virginia Beach (52)

MD: Baltimore (51)

NV: Las Vegas (50)

CT: Bridgeport (46)

NH: Manchester (47)

NJ: Newark (46)

WA: Seattle (47)

NC: Charlotte (47)

OR: Portland (44)

CA: Los Angeles (43)

NE: Omaha (42)

OK: Oklahoma City (41)

ME: Portland (40)

IL: Aurora (39)

VT: Burlington (38)

DE: Wilmington (37)

KY: Louisville (36)

WI: Milwaukee (35)

ND: Fargo (34)

SD: Sioux Falls (33)

AK: Anchorage (32)

MI: Detroit (31)

ID: Boise (30)

MT: Billings (29)

OH: Columbus (28)

TX: Houston (27)

NY: Buffalo (26)

AR: Little Rock (25)

NM: Albuquerque (24)

TN: Nashville (23)

GA: Atlanta (22)

UT: Salt Lake City (21)

IA: Des Moines (20)

Average for Cities

MN: Minneapolis (19)

AL: Birmingham (18)

DC: Washington (17)

LA: New Orleans (16)

AZ: Phoenix (15)

KS: Wichita (14)

MO: Kansas City (13)

PA: Philadelphia (12)

MS: Jackson (11)

WV: Charleston (10)

IN: Indianapolis (9)

IL: Chicago (8)

FL: Jacksonville (7)

NY: New York City (6)

RI: Providence (5)

HI: Honolulu (4)

CO: Denver (3)

MA: Boston (2)

SC: Charleston (1)