Since colonial times, property taxes have been a cornerstone of local government in America, funding the essential services that communities rely on every day, such as public safety, education, hospitals, emergency response, roads and bridges, parks, libraries and more.

Yet amid a national affordability crisis, state policymakers and residents have been increasingly pursuing property tax reform to ease homeowners' financial burdens. While these sweeping proposals may offer some financial relief, the public debate about property taxes often overlooks the potential implications of tax reductions for local services and how state-imposed restrictions can limit local governments’ flexibility to invest in community priorities.

This report examines the recent wave of state property tax reforms from the perspective of county governments. As administrative subdivisions of the state, counties are mandated by law to provide essential services to residents, yet state funding does not fully cover the costs of these responsibilities. Counties, therefore, rely on a mix of local taxes, fees and intergovernmental funding to support service delivery.

Property taxes are fundamentally local taxes, with approximately 3% of revenue going to states and the remainder supporting school districts, counties, townships, municipalities and special districts. Counties balance the need to keep our share of the property tax bill affordable with the responsibility to maintain quality services for residents, a challenge compounded by rising costs. In nearly every state, counties already face limitations on the types of taxes we can levy and the rates we can set.

The sections below examine state property tax reforms enacted since 2020, the factors driving increases in property tax bills and the essential services these revenues support. As vital partners in our nation's federalist system, counties need the authority and flexibility to raise and invest revenues in ways that reflect community priorities and meet our responsibilities mandated by law.

A Brief History of Property Tax in the United States

Property taxes are among the oldest forms of taxation. Kings in feudal Europe legally owned all the land and used property to estimate the amount each person could pay to the crown as their “rent”: it was an attempt at taxation based on wealth and the ability to pay. Only later did the tax come to be regarded as a tax on property itself. The property tax came over to the American colonies early on, but after the Revolutionary War, leaders began debating how to enshrine the ideals of equality and democracy found in the Declaration of Independence in the taxation system. No longer were citizens paying “rent” to a king who owned all the land and “[imposed] Taxes on us without our Consent”;ⁱ rather, Americans were contributing to a collective society of which each individual was a member – a government “of the people, by the people, for the people.”ⁱⁱ

In the United States, the property tax functioned as the bedrock of revenue for local governments in the early colonies, through the time of westward expansion and into our modern economic system. Throughout the two and half centuries which followed the birth of our nation, states and local governments have been reforming the property tax system to try and better estimate the amount each person is able to contribute to key shared services which the government provides, often driven by these major economic shifts.ⁱⁱⁱ

There is currently a new movement seeking to reform property taxes, which has its roots in a wave of “tax revolts” in the 1970s and 1980s. At that time, a combination of rising housing prices, high inflation, high unemployment and low economic growth made it more difficult for many homeowners to afford their property tax bills: they felt their property values no longer reflected the amount they could contribute to the community.^iv State policymakers channeled this public resentment into sweeping property tax limitations in the form of rate limits, levy limits, assessment limits and more – many of which are still in effect today.^v

State Legislation on Property Tax Reform 2020 - 2026

Property taxation is primarily governed by state and local laws, with states establishing the framework within which local governments exercise their taxing authority. The question of property taxes, therefore, is not a federal issue, but a state one. Nevertheless, there is a current movement against property taxes which is national in scope. From January 2020 to June 2026, state legislatures enacted at least 168 property tax actions in 40 states and the District of Columbia.^vi These actions were not limited to any one specific region or political party but were widespread across a variety of states. States as politically different as Texas and Minnesota, or as geographically separate as Georgia and Oregon, all enacted legislation which would reduce property tax revenues and discretion for local governments.

State legislative actions were calculated to reduce local tax revenues by $15.3 billion in the fiscal year after passage, followed by another $14.5 billion in the next fiscal year.

These actions have substantial impacts on current and future budgets: in total, state legislative actions were calculated to reduce local tax revenues by $15.3 billion in the fiscal year after passage, followed by another $14.5 billion in the next fiscal year – not including the 34 ballot measures and six other bills which passed and do not have fiscal notes.^vii

Many of these bills will have longer-lasting consequences, resulting in compounding revenue losses in subsequent years. Of this nearly $30 billion two-year fiscal impact, approximately 16% of this cost will fall directly and solely on local governments.^viii Another 25% of the cost will be borne by state governments – meaning the state has committed to paying local governments back for lost property tax revenue, at least temporarily.^ix The majority (58%) of the cost will be shared between state and local governments in some way.^x It is important to note, however, that the costs borne entirely or in part by state governments may easily shift to local governments in the future, since property tax revenue is fundamentally the purview of local governments, and some state legislation provides reimbursements for lost revenue only for a certain period of time.^xi

Costs borne entirely or in part by state governments may easily shift to local governments in the future, and some state legislation provides reimbursements for lost revenue only for a period of time.

Since 2020, states have cut back property tax revenues using a variety of methods. Traditional property tax limits set a cap on the amount of revenue local governments can collect from property taxes, whether by fixing a maximum tax rate (rate limit), capping increases in total tax revenue (levy limit) or limiting increases in assessed property values for tax purposes (assessment limit). Some states also mandate that local governments apply their property tax rates to only a fraction of a property’s total assessed value (assessment ratio). As previously mentioned, many states have had limits like these set in place since the “tax revolts” of the 1970s and 1980s.^xii Local governments tend to bear the costs of these traditional limits, and they are the norm across the U.S.^xiii In fact, all states except five – Hawaii, Kansas, Minnesota, New Hampshire and Tennessee – set significant limits on counties’ ability to raise revenue through property taxes.^xiv

Property tax reductions can also come in the form of relief measures, which reduce property tax bills for certain eligible groups of residents. Some relief measures reduce the assessed value of certain kinds of property by a fixed amount (exemptions), while others reduce tax bills more directly through credits or refunds – usually only for low-income residents. Many of these exemptions, credits or refunds tend to be funded by the state in part, at least temporarily. And some states will even pay local governments directly to help fund services while lowering property tax rates. But states can easily pass these costs to local governments when state budgets are tighter. While not every state imposes limitations, all provide at least some property tax relief, most often in the form of exemptions, tax credits, circuit breakers and deferrals.

The largest share (65) of the policy actions passed between 2020 and June 2026 created or modified a property tax exemption.

The current movement against property taxes is taking the form of relief measures which chip away at the tax base. Nearly three-quarters (72%) of the property tax actions passed from 2020 through June 2026 – 121 out of 168 – increased relief measures in some way. The largest share (65) created or modified a property tax exemption in 20 different states.

Wyoming and Texas are two prominent examples.

• Wyoming created a 50 percent exemption (up to $3 million) for long-term homeowners 65 and older who have paid property taxes for 25 years or more (HB 3 and HB 45), as well as a 25 percent exemption on the first $1 million of market value for owner-occupied residential properties (SF 49).
• Texas raised its general homestead exemption for school property taxes from $100,000 to $140,000 (SB 4) and increased its additional senior and disabled exemption from $10,000 to $60,000 (SB 23); these two increases alone are expected to reduce property tax revenues in Texas by $2 billion each year.

Sixteen pieces of legislation in 11 states (Arizona, Arkansas, Delaware, Georgia, Indiana, Maine, Maryland, Massachusetts, Missouri, Nebraska and North Dakota) implemented new or modified existing property tax credits.

• Indiana enacted a piece of major property tax legislation which included a 10 percent property tax credit (up to $300) on all homesteaded properties in 2026, additional credits for seniors and disabled veterans, an increased exemption for business personal property and modified farmland assessment ratios (SEA 1).
• Delaware increased the senior property tax credit from $400 to $500 per year (HB 250).
• Arizona, Arkansas and North Dakota all expanded their homestead property tax credits (SB 1828, SB 263 and HB 1176, respectively). All of these property tax credits combined cost (or will cost) state and local governments nearly $3.3 billion in the first two years after passage.

Twenty-six state actions provided other kinds of direct or indirect property tax relief, whether in the form of direct payments to residents, circuit breakers, deferrals or supplemental aid to local governments. Twelve pieces of legislation across eight states (Colorado, Delaware, Georgia, Idaho, Illinois, Massachusetts, Montana and Utah) provided relief directly to homeowners, like the $30 million Veterans Property Tax Relief Reimbursement Program in Illinois (SB 1293) or the one-time property tax relief grant in Georgia (HB 18). Another 14 pieces of legislation in Minnesota and Wisconsin provided aid to local governments or special taxing districts to help relieve some pressure on property taxes as the demand for local services increases: for example, a $188-million school aid increase in Wisconsin (AB 68) or an $80-million county aid increase in Minnesota (HF 1938). In total, these other forms of relief are estimated to cost over $3.5 billion in the two years following their passage.

Although nearly every state imposes limits on local property tax authority, and every state also provides property tax relief, policymakers and residents are increasingly expressing that these limits are enough. Since 2024, at least 15 states have discussed some form of property tax elimination, though none have passed any legislation to do so.^xv Proposals to eliminate property taxes have included numerous options to replace the lost revenue.

• A bill in Georgia proposed charging direct fees for local services (HR 1114 / HB 1116). Bills in Indiana and Kansas planned to fill in the funding gap by eliminating certain sales tax exemptions (HB 1288 and HCR 5014, respectively).
• Nebraska, Oklahoma, South Dakota and Wyoming have all seen elimination proposals which include higher sales or consumption taxes.
• North Dakota has begun paying down property taxes using a state fund generated from oil revenue and is considering increasing that amount until the state can effectively eliminate property taxes.

Since 2024, at least 15 states have discussed some form of property tax elimination, though none have passed any legislation to do so.

As research from the Tax Foundation demonstrates, any replacement revenue at the local level could result in widely different rates across counties to generate the same funding levels, while state-level replacement revenue would result in a politically challenging redistribution of funding, with losers effectively subsidizing the winners.^xvi Not every state, however, has settled on a replacement revenue stream in their elimination proposals.

Counties invest over $740 billion each year to provide crucial local services, with most funding going to health, public safety and education.

County leaders understand that rising property tax bills are a challenge for many residents and small businesses, and actively work to keep property tax rates as low as possible while still providing for the needs of local communities. But it is a balancing act. Counties invest over $740 billion each year to provide state-mandated local services, including roads, bridges, hospitals, courts, jails, public safety, 911 centers, education, utilities, parks, libraries, economic development and much more.^xxv

Over one quarter of this investment ($200 billion, or 26%) is only possible because of property taxes – the largest source of revenue for local services.^xxvi And although counties usually collect all property taxes, the largest share of the revenue (41%) goes toward schools.^xxvii As previously mentioned, states collect very little property tax revenue, and the federal government collects none: it is a specifically local source of revenue. As such, property taxes are invested locally to tangibly benefit those who pay them, that is, the homeowners and renters living nearby, with their direct input – more so than any state or federal taxes.

Even though residents tend to have a negative view of property taxes in the abstract,^xxviii on the ground, community members tend to support property taxes and local control of them. In an analysis of 292 local ballot measures related to property taxes which were introduced from 2020 to 2025, 246 (84%) passed.^xxix Most of these ballot measures were connected to specific services, such as schools, parks, physical or behavioral health services or libraries, because residents are often willing to pay more in taxes if they understand where the money will go. Furthermore, no state to date has had a property tax elimination ballot pass. As an example, North Dakota voters were directly asked in 2024 if they would like to eliminate property taxes and replace them, not with an additional sales or income tax levy, but with revenue from the state’s oil fund. This measure was voted down by a very large margin: 63-37.^xxx

Residents are often willing to pay more in taxes if they understand where the money will go.

After adjusting for population growth and the cost of government services, county property tax revenues increased by less than 1% annually, on average, between 2002 and 2022.^xxxi These revenues have not increased exponentially in line with the housing market, but have simply kept pace with inflation and population growth and have consistently provided about three-fifths of all county tax revenue.^xxxii In fact, the cost of providing government services has risen more quickly than the cost of living (49% vs. 44%, respectively, from 2010-2024), reflecting how fiscally strained local governments are, in addition to their residents.^xxxiii

The cost of providing government services has risen more quickly than the cost of living (49% vs. 44%, respectively, from 2010-2024).

There may be a movement to curtail property tax bills, but on the ground, residents still expect and value high-quality services. Roads, bridges, 911 centers, parks, libraries, schools, police and fire protection, trash and recycling centers, clean water and many other local services are integral to the wellbeing of any community. If state lawmakers aim to reduce property tax revenues, they must consider alternatives. Property taxes are the number one source of revenue for counties – not to mention the most flexible under current laws – but they are not the only source of revenue.^xxxiv Counties in every state utilize some combination of property taxes with other tax revenue, fees for services and intergovernmental transfers to provide services.^xxxv For some county governments, this revenue structure is an intentional policy decision, while for many others, their revenue structure is imposed and limited by state statutes.

Counties across the country have distinct needs and thus set our own property tax rates (within limits imposed by state statutes). From agricultural and manufacturing centers to communities reliant on natural resource development and tourism, and from growing communities with young families to those with aging populations, local priorities and service needs vary widely. Some communities may be willing to pay higher property taxes in exchange for higher levels of service, while other communities may be content with lower taxes and lower levels of service. Property taxes may work well as the top source of revenue in one county, while sales or income taxes may work better in a neighboring county. Residents should make these decisions at the local level with their local government, rather than be subject to a “one-size-fits-all” decision imposed by a higher level of government.

Access more resources for a deeper look at property tax reform and how local governments are continually improving the fairness and efficacy of the property tax system.

• GFOA: Rethinking Revenue
• IAAO: Why Property Taxes Matter
• Tax Foundation: Confronting the New Property Tax Revolt
• Lincoln Institute of Land Policy: 50-State Property Tax Comparison Study

Every State Limits Local Fiscal Autonomy

Limits on Local Property, Sales and Income Taxes, by State