State Tax Comparisons

Posted: May 17, 2012 in Uncategorized

Taxes on land and the buildings on it are the biggest source of revenue for local governments. They are not imposed by states but by the tens of thousands of cities, townships, counties, school districts and other assessing jurisdictions. The state's role is to specify the maximum rate on the market value of the property, or a percentage of it, as the legal standard for the local assessors to follow. The local assessor determines the value to be taxed. You can't escape property taxes in any state. But you can find significantly low rates in certain parts of the country.
 Most states give residents over a certain age a break on their property taxes. In some states, you'll need a relatively low income to qualify.
 Forty states provide either property tax credits or homestead exemptions that limit the value of assessed property subject to tax.
 All 50 states offer some type of property tax relief program, such as freezes that will lock in the assessed value of your property once you reach a certain age, or deferral of taxes until the homeowner moves or dies. They ultimately have to be paid. In addition, counties and municipalities often have their own property tax relief plans.
 Retirees with low incomes and high housing costs may face property tax bills that are higher than they can manage. Some states target property tax relief to those homeowners bearing the greatest burden. Property tax reform that takes into account a homeowner’s ability to pay, such as a so-called “property tax circuit breaker,” can better protect low-income homeowners from rising property taxes that accompany rising property values. Targeted property tax relief avoids sharp reductions in funding for locally provided public services and inequities based solely on date of purchase.
 A property tax circuit breaker prevents property taxes from “overloading” a taxpayer. Under a typical circuit breaker, the state sets a maximum percentage of income that an eligible family can be expected to pay in property taxes. If property taxes exceed this limit, the state then provides a rebate or credit to the taxpayer. Currently, of the 31 states and the District of Columbia with circuit breakers for homeowners, only six and the District of Columbia permit all households to participate in the program without regard to age.
 Other property tax relief strategies that may be used to target property tax relief include homestead exemptions which exempt a certain amount of a home’s value from taxation, credits to rebate a certain percentage of taxes paid, and deferral programs to allow low-income elderly homeowners to defer payment of property taxes until property is sold.
Property Taxes by County – Using data from the 2009 American Community Survey (U.S. Census Bureau) the Tax Foundation, based in Washington, D.C., has published figures on property tax paid by households on owner-occupied housing. It shows median property taxes paid on homes, median home value, taxes as a percentage of home value, median income for homeowners, and taxes as a percent of income. The table includes all 793 counties in the United States (excluding Puerto Rico) with populations greater that 65,000. The figures exclude property taxes paid by businesses, renters and others. The data can be looked at three different ways:
 Property Taxes on Owner-Occupied Housing, by County, Ranked by Taxes As a Percentage of Home Value, 2007 – 2009 (three-year average)
 Property Taxes on Owner-Occupied Housing, by County, Ranked by Taxes As a Percentage of Household Income, 2007 – 2009 (3-year average)
 Property Taxes on Owner-Occupied Housing, by County, Ranked by Property Taxes Paid, 2007 – 2009 (3-year average)
[Source: MOAA General State Tax Overview Mar 2012 ++]


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