States Consider Abolishing Property Taxes

For millions of Americans, rising assessments have caused property tax bills to jump sky high. This has threatened to kick many out of their own homes. To address the problem, many states have begun to offer relief programs. But a handful of states have decided to go where no one has gone before and completely eliminate them. Which bold states are considering such a proposal and how can they make up the lost revenue? Read on to find out!

A Rising Tide Lifts All Assessments

It’s no secret that home values have increased significantly over the past few years. The increases were largely driven by the COVID pandemic, along with historically low mortgage interest rates. From 2020 through 2025, home values have increased by about 45%. But rising home prices can and usually do lead to increased assessments for everyone. Since the median household income has only risen by about 8.1%, more homeowners than ever are feeling immense financial pressure. Rent, House Prices, and Demographics | U.S. Department of the Treasury.  Throw inflation into the mix, and you have a recipe for angry homeowners.

Axing the Tax

Lawmakers and advocacy groups across the country largely agree that property tax bills are a significant issue, but not everyone agrees on a solution. Some states have proposed completely eliminating property taxes. These include North Dakota, Georgia, Florida, Texas, and Indiana. Eliminating property taxes would help homeowners save thousands each year, yet such a shift isn’t as simple as it sounds. Municipal budgets heavily rely on local property tax revenues to fund essential services such as schools, police departments, fire departments, and EMTs. Going cold turkey on property taxes would result in billions of dollars being cut.

How will essential public services continue to operate if all property taxes are phased out? North Dakota officials have proposed using the state’s massive oil fund to gradually phase out property taxes. Georgia is considering having local governments send bills to homeowners for public services. In Florida, one solution is to increase sales taxes. However, a complete property tax to sales tax swap would require the sales tax rate to essentially double. Property Tax Repeal & Replacement: Tax Revenue Impacts.  This could disproportionately affect lower-income households that spend a higher percentage of their income on taxable goods. It could also lead to less stable revenues for municipalities because, unlike regular property tax payments, sales taxes depend on household spending, which is far less consistent. Indiana is considering expanding the sales and use tax to cover more goods and services. And don’t count the Lone Star State out – Texas is also considering eliminating school property taxes. Gov. Greg Abbott has proposed using state surpluses for such an endeavor, but a concrete plan has yet to be announced.

Conclusion

Putting an end to property taxes is far from an easy achievement. While North Dakota is fortunate to have significant funds available for such a plan, other states will need to find clever solutions to make up for lost revenue. Those in New Jersey hoping for a similar proposal shouldn’t hold their breath.

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