5 states are considering measures to ease or eliminate property taxes for homeowners
Florida Governor Ron DeSantis Joins ‘Varney & Co.’ talking about property tax exemptions, AI state legislation and next year’s midterm elections.
American taxpayers could see relief property taxes in the future as at least five states are currently considering eliminating the property tax entirely, which could force states and localities to turn to other sources to fund critical public services.
An Realtor.com analysis broke down the effort to eliminate the property tax in five states and noted that some of the proposals were more fully developed than others in terms of finding a place for lost tax revenue to avoid straining local and local government budgets.
Property taxes provide an important source of revenue for state and local governments, accounting for 90% of school revenue, 70% of local revenue, and 25% of all state and local tax revenue, according to Billy Hamilton, vice chancellor from Texas A&M University.
While they play an important role in state and local government finances, they can pose a challenge to the accessibility of home ownership – especially for Americans who live on fixed incomes and can face large payments when the tax bill arrives.
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Here’s a look at the state’s ongoing efforts to reduce or eliminate property tax burdens described in the Realtor.com report:
North Dakota
The state capitol building in Bismark, North Dakota. (Getty Images)
North Dakota’s Republican Gov. Kelly Armstrong proposed using about $483 million in the state’s general fund and future revenue from the state’s oil tax savings account to offset the property tax abatement and debt over time with the goal of eventually eliminating it for most homeowners within a decade.
Armstrong’s plan would begin by expanding the existing tax credit for primary residences, reducing property tax bills by up to $1,550 per household per year.
It will grow every two years from there with additional profits from oil tax The savings account offsets the change, while covering the annual 3% property tax increase. Additional relief would come from expanding the property tax credit for seniors who meet income limits and people with disabilities.
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Georgia
Aerial view, downtown skyline seen from Piedmont Park on May 15, 2024, in Atlanta, Georgia. Atlanta is one of the cities that will host the 2026 World Cup. (Alex Slitz – FIFA/FIFA via Getty Images)
A proposal by state GOP lawmakers would eliminate most property taxes by 2032, in an effort that begins with a $10 billion outlay by the state government to lower current property taxes. It would also increase the property tax exemption on basic residences from $5,000 to $150,000 in 2031, with most property taxes phased out the following year.
Local governments will then compensate for the lost revenue by charging homeowners for services such as garbage collection, flood control and fire protection. The proposal would require voter approval for other improvements, such as those for public infrastructure or schools.
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In Florida
Republican Gov. Ron DeSantis has pressed lawmakers to unite behind a single package the state can put before Florida voters. (Jeffrey Greenberg/UCG/Universal Images Group via Getty Images)
Policymakers in Florida have been debating the issue of property tax elimination or relief measures for about a year, with more than a half-dozen proposals discussed over the past year that would eliminate or reduce the property tax on residential properties.
Republican government. Ron DeSantis pressed lawmakers to rally behind a single package the state could put before Florida voters.
To illustrate the challenges of replacing lost property tax revenue, an analysis by the Tax Foundation found that replacing lost property tax revenue with higher sales taxes would require raising the sales tax rate from an average of 7.02% to 15.34%. The nonpartisan think tank also noted that it could reduce the deficit as taxpayer behavior changes.
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Texas
View of Austin, the capital of Texas. (Stock)
Republican government. Greg Abbott seeks to eliminate school property taxes following the passage of several measures aimed at easing property tax burdens in recent years, such as rate suppression and the homestead exemption.
Abbott has proposed using money left over from the state budget to buy off the school property tax for a period of time until it is completed. However, lawmakers are still debating a long-term solution to replace lost education funding.
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In Indiana
A restaurant in Indianapolis, Indiana. (Getty Images)
Indiana’s HB 1288 would end property taxes after Dec. 31, 2026, while eliminating property taxes entirely by 2027.
The proposal would look to restore lost tax revenue by expanding Indiana’s sales and use taxes to pay for more services, and the profit from that transfer will be redistributed through the local government sharing fund.
