New Report Analyzes Variation in Effective Property Tax Rates Across US States
The Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence report highlights the impact of public policy, property values, and local spending decisions on property tax rates.
CAMBRIDGE, Mass., July 16, 2025 /PRNewswire/ -- The Lincoln Institute of Land Policy and Minnesota Center for Fiscal Excellence have released their latest 50-State Property Tax Comparison Study, offering a detailed, city-by-city analysis of property tax rates for the 2024 tax year. The report identifies four factors that explain the variation in effective property tax rates: property tax reliance, property values, level of government spending, and how local tax systems treat different types of property.
This annual study evaluates effective tax rates (property taxes as a percentage of market value) of 75 large US cities and 50 rural municipalities (one in each state) on homestead, commercial, industrial, and apartment properties. The data reveals that high effective property tax rates usually arise from some combination of high reliance on property taxes, low home values, and higher local government spending.
"Even though this year's report shows that the average effective tax rate on a median-valued home in each state's largest city fell by over 5 percent compared to 2023, about 20 of these 53 cities experienced an increase in effective tax rates," said Bethany Paquin, senior research analyst at the Lincoln Institute of Land Policy. "Differences in the structure of state property tax systems, reliance on the property tax versus other state and local taxes, property tax relief policies, how property is classified, and local preferences all play a role in the variation we see in property tax rates on homes across the country."
Detroit, Michigan, has the highest homestead effective property tax rate in the country, primarily because of the city's low home values. A median-valued home in Detroit faces an effective property tax rate of 3.02 percent. In contrast, high property values, low local government spending, and classification that favors homeowners all contribute to Honolulu, Hawaii's lowest-in-the-nation effective tax rate of 0.30 percent. K–12 education is the largest expenditure for local governments across the US, but in Hawaii school funding is centralized at the state level, contributing to lower local government spending. These cities illustrate how the size of a local government's tax base, the public services it provides, and its state and local government tax structure influence homeowner property tax rates.
Another key driver of tax disparities is the use of assessment limits, which restrict how fast property values can rise for tax purposes. While intended as tax relief, the report finds these limits shift the tax burden to new homeowners, particularly in high-growth markets, while rewarding long-time owners. In cities like Tampa, Los Angeles, and Miami, a new homeowner might pay at least double the property taxes a neighbor in an identical home pays.
In many states, commercial, industrial, and apartment properties face higher effective tax rates than homes due to classification systems that favor homeowners. In Charleston, South Carolina, due to classified tax rates and an exemption for homeowners from property taxes for school operations, commercial and apartment buildings are taxed at nearly six times the rate of owner-occupied homes, raising concerns about impacts on renters and small businesses.
"Although effective tax rates are the best way to compare levels of taxation across jurisdictions, whether a rate is high or low doesn't tell the whole story," said Bob DeBoer, research director at the Minnesota Center for Fiscal Excellence. "This report is the best representation of the design of property tax systems across the country and reminds us that state policy decisions can result in dramatic differences in tax burdens between different classes of property."
The report's analysis of the largest city in each state shows that the average effective tax rate on a median valued homestead was 1.22 percent in 2024 for this group of 53 cities. At that rate, a home worth $200,000 would owe $2,440 in property taxes (1.22 percent x $200,000). On the high end, three cities have effective tax rates at least two times higher than the average—Detroit, Aurora (IL), and Portland (OR). Conversely, eight cities have tax rates half the study average or less—Honolulu, Boston, Charleston (SC), Salt Lake City, Denver, Huntsville (AL), Nashville, and Boise.
Highest and Lowest Effective Property Tax Rates on a Median Valued Home (2024)
Highest Property Tax Rates | Lowest Property Tax Rates | ||||||
1 | Detroit (MI) | 3.02 % | Why: Low property values | 49 | Denver (CO) | 0.52 % | Why: High home values, low property tax reliance, classification |
2 | Aurora (IL) | 2.88 % | Why: High property tax reliance | 50 | Salt Lake City (UT) | 0.52 % | Why: High home values, low property tax reliance |
3 | Portland (OR) | 2.59 % | Why: Assessment limit shifts tax to newly built homes | 51 | Charleston (SC) | 0.49 % | Why: High home values, classification shifts tax to business |
4 | Burlington (VT) | 2.32 % | Why: High local gov't spending, declining state credit | 52 | Boston (MA) | 0.49 % | Why: High home values, classification shifts tax to business |
5 | Baltimore (MD) | 2.14 % | Why: Low property values | 53 | Honolulu (HI) | 0.30 % | Why: High home values, low local gov't spending, classification |
Note: Data for all cities: Figure 2 (page 21), Appendix Table 1a (page 54), and Appendix Table 2a (page 62). | |||||||
To dive into the property tax rates on commercial properties, understand the preferential treatment of homeowners, and see more property tax analysis, read the 50-State Property Tax Comparison Study on the Lincoln Institute's website here.
About The Minnesota Center for Fiscal Excellence
The Minnesota Center for Fiscal Excellence was founded in 1926 to promote sound tax policy, efficient spending, and accountable government. As a nonprofit, nonpartisan group supported by membership dues, the center pursues its mission by educating and informing Minnesotans about sound fiscal policy; providing state and local policymakers with objective, nonpartisan research about the impacts of tax and spending policies; and advocating for the adoption of policies reflecting principles of fiscal excellence.
About The Lincoln Institute of Land Policy
The Lincoln Institute of Land Policy seeks to improve quality of life through the effective use, taxation, and stewardship of land. A nonprofit private operating foundation whose origins date to 1946, the Lincoln Institute researches and recommends creative approaches to land as a solution to economic, social, and environmental challenges. Through education, training, publications, and events, we integrate theory and practice to inform public policy decisions worldwide.
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SOURCE Lincoln Institute of Land Policy