Property tax

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State tax policy

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Corporate income tax

Tax policy in the states
AlabamaAlaskaArizonaArkansasCaliforniaColoradoConnecticutDelawareFloridaGeorgiaHawaiiIdahoIllinoisIndianaIowaKansasKentuckyLouisianaMaineMarylandMassachusettsMichiganMinnesotaMississippiMissouriMontanaNebraskaNevadaNew HampshireNew JerseyNew MexicoNew YorkNorth CarolinaNorth DakotaOhioOklahomaOregonPennsylvaniaRhode IslandSouth CarolinaSouth DakotaTennesseeTexasUtahVermontVirginiaWashingtonWest VirginiaWisconsinWyoming
Most often, property tax applies to real estate, although some states impose property taxes on other kinds of personal property, such as automobiles. Property taxes comprise the lion's share of local government revenues. In 2010, property taxes accounted for 75 percent of the tax revenues collected by local governments (such as cities, counties, school districts, etc.). Conversely, states generate very little revenue from property taxes (2 percent in 2010). States that do not levy sales or personal income taxes, however, may collect greater revenues from property taxes.[1][2][3][4][5]

How property tax works

In order to determine property tax liability, a property's value must first be determined. Two values are taken into consideration: the property's market value and the property's assessed value. Assessed value is used for tax purposes and is calculated by applying an assessment ratio to the market value. Some states use a property's market value in calculating its tax, in which case a 100 percent assessment ratio is used. Other states, such as New Mexico and Arkansas, "assess property at only a fraction of its actual value."[1][2][3]

Once the assessed value of a property has been calculated, the amount may be further reduced by exemptions. A common exemption in many states is the "homestead exemption," which allows for a certain, predetermined amount to be subtracted from the assessed value of primary residences. The taxable value of a property is the assessed value minus any exemptions.[1][2][3]

The property tax rate is applied to the property's taxable value. The property tax rate is also known as the millage rate and is often "the sum of several tax rates applied by several different jurisdictions." Any given property could be subject to city taxes, county taxes, school district taxes and more. Millage rates are rendered in "mills." A mill is one-tenth of 1 percent. For example, a 27 mill property tax rate would be equivalent to 2.7 percent. Property tax liability is determined by applying the millage rate to the taxable value of the property. Additional credits may be available to property owners, which can further reduce an owner's tax liability.[1][2][3]

This scenario further illustrates the process. Assume that a property's market value is determined to be $100,000. An assessment ratio of 100 percent is applied to the market value, resulting in an assessed value of $100,000. Assuming that the property is a primary residence and the state in which it is located offers a homestead exemption of $20,000, the property's taxable value would be reduced to $80,000. A millage rate of 27 mills (or 2.7 percent) is applied to the taxable value, which results in a final property tax liability of $2,160.

Property taxes by state

Amounts paid

The table below provides the mean amount of property taxes paid, as well as property tax as a mean percentage of home value, for the United States for 2012. According to the Tax Policy Center, which compiled the below data, New Jersey's mean property tax as a percentage of home value ranked highest in the nation in 2012 at 2.32 percent. By contrast, Hawaii ranked lowest in the nation at 0.27 percent. In terms of the mean amount paid in property tax, New Jersey again ranked the highest at $7,318 while Alabama ranked lowest at $631.[4]

Mean property taxes paid per state, 2012
State Mean amount paid Mean property tax as a percent of home value
Alabama $631 0.46%
Alaska $3,290 1.28%
Arizona $1,330 0.88%
Arkansas $901 0.68%
California $3,164 0.88%
Colorado $1,581 0.66%
Connecticut $5,200 1.88%
Delaware $1,206 0.53%
District of Columbia $2,635 0.57%
Florida $1,779 1.16%
Georgia $1,698 1.06%
Hawaii $1,351 0.27%
Idaho $1,273 0.84%
Illinois $4,469 2.28%
Indiana $1,200 0.93%
Iowa $2,398 1.6%
Kansas $2,129 1.4%
Kentucky $1,339 0.92%
Louisiana $823 0.52%
Maine $2,401 1.29%
Maryland $3,149 1.15%
Massachusetts $3,805 1.19%
Michigan $2,347 2.06%
Minnesota $2,565 1.28%
Mississippi $1,004 0.8%
Missouri $1,767 1.19%
Montana $1,932 0.92%
Nebraska $2,959 2.01%
Nevada $1,518 1.01%
New Hampshire $5,230 2.18%
New Jersey $7,318 2.32%
New Mexico $1,325 0.8%
New York $5,040 1.68%
North Carolina $1,464 0.9%
North Dakota $2,530 1.54%
Ohio $2,327 1.77%
Oklahoma $1,320 1.02%
Oregon $2,594 1.12%
Pennsylvania $2,638 1.55%
Rhode Island $3,820 1.67%
South Carolina $858 0.57%
South Dakota $2,190 1.43%
Tennessee $1,372 0.91%
Texas $2,790 2.02%
Utah $1,514 0.73%
Vermont $4,328 1.62%
Virginia $2,860 0.92%
Washington $2,914 1.12%
West Virginia $718 0.62%
Wisconsin $3,530 2.07%
Wyoming $1,141 0.63%
Source: Tax Policy Center, "Residential Property Taxes in the United States," November 18, 2013

Collections per capita

The table below summarizes per capita state and local property tax collections for fiscal year 2011. According to the Tax Foundation, which compiled the data below, New Jersey's property tax collections per capita ranked highest in the nation at $2,893. Conversely, Alabama's collections per capita ranked lowest at $540.[6]

State and local property tax collections per capita, 2011
State Collections per capita Ranking
Alabama $540 51
Alaska $2,076 9
Arizona $1,103 32
Arkansas $619 49
California $1,426 20
Colorado $1,637 14
Connecticut $2,577 3
Delaware $737 46
District of Columbia $2,871 2
Florida $1,368 23
Georgia $1,060 34
Hawaii $966 38
Idaho $867 41
Illinois $1,881 11
Indiana $971 37
Iowa $1,429 19
Kansas $1,367 24
Kentucky $689 47
Louisiana $776 44
Maine $1,808 12
Maryland $1,449 18
Massachusetts $2,018 10
Michigan $1,374 22
Minnesota $1,535 17
Mississippi $856 42
Missouri $979 36
Montana $1,347 25
Nebraska $1,566 15
Nevada $1,110 31
New Hampshire $2,518 4
New Jersey $2,893 1
New Mexico $659 48
New York $2,335 5
North Carolina $900 40
North Dakota $1,074 33
Ohio $1,140 30
Oklahoma $590 50
Oregon $1,312 26
Pennsylvania $1,305 27
Rhode Island $2,162 8
South Carolina $1,032 35
South Dakota $1,196 29
Tennessee $800 43
Texas $1,557 16
Utah $913 39
Vermont $2,197 6
Virginia $1,377 21
Washington $1,279 28
West Virginia $770 45
Wisconsin $1,724 13
Wyoming $2,175 7
Source: Tax Foundation, "Facts and Figures 2014: How Does Your State Compare?" March 18, 2014

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See also

External links

References