Florida Governor Ron DeSantis Joins ‘Varney & Co.’ to talk about eliminating property taxes, the state’s AI legislation, and next year’s midterm elections.
American taxpayers could see some relief property taxes in the future, as at least five states are currently considering eliminating property taxes altogether, which could force states and localities to turn to other sources to fund important public services.
A analysis by Realtor.com broke down the effort to eliminate property taxes in five states, noting that some proposals are more fully developed than others in terms of finding a replacement for lost tax revenue to avoid straining state and local government budgets.
Property taxes are a major source of revenue for state and local governments, accounting for 90% of school funding, 70% of local revenues and 25% of all total state and local tax revenues, according to Billy Hamilton, vice chancellor emeritus at Texas A&M University.
While they play a key role in state and local government finances, they can also pose a challenge to homeownership affordability – especially for Americans who live on fixed incomes and may face large payments when the tax bill comes due.
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Here’s a look at the state’s ongoing efforts to reduce or eliminate the real estate tax burden, as detailed in the Realtor.com report:
North Dakota
The State Capitol building in Bismark, North Dakota. (Getty Images)
The Republican government of North Dakota. Kelly Armstrong has proposed using about $483 million from the state’s general fund, along with future revenue from the state’s oil tax savings account, to offset property tax cuts and credits over time, with the goal of eventually eliminating them for most homeowners within a decade.
Armstrong’s plan would start by expanding an existing tax credit for primary residences, reducing property tax bills by up to $1,550 per household annually.
From there it would increase every two years with a larger share of the proceeds oil tax savings accounts will offset the shift, while limiting annual local property tax increases to 3%. Further relief would come from expanding a property tax credit for seniors who meet income limits and for people with disabilities.
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Georgia
An aerial view shows the downtown skyline from Piedmont Park on May 15, 2024 in Atlanta, Georgia. Atlanta is one of the host cities for the 2026 World Cup. (Alex Slitz – FIFA/FIFA via Getty Images)
A proposal from Republican lawmakers would eliminate most property taxes by 2032, with the effort starting with a $1 billion expenditure by the state government to reduce current property taxes. It would also increase property tax exemptions for primary residences from $5,000 to $150,000 in 2031, with most property taxes eliminated the following year.
Local governments would then make up for the lost revenue by billing homeowners for services such as trash collection, stormwater management and fire protection. The proposal would require voter approval for other improvements, such as those to government infrastructure or schools.
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Florida
Republican Gov. Ron DeSantis has urged lawmakers to get behind one package that the state can put before Florida voters. (Jeffrey Greenberg/UCG/Universal Images Group via Getty Images)
Policymakers in Florida have been debating the elimination or relief of property taxes for about a year, with more than a half-dozen proposals discussed over the past year that would phase out or ease property taxes on primary residences.
Republican government Ron DeSantis has urged lawmakers to get behind one package that the state can put before Florida voters.
To illustrate the challenges of replacing lost property tax revenue, a Tax Foundation analysis found that replacing lost property tax revenue with higher sales taxes would require an increase in the sales tax rate from an average of 7.02% to 15.34%. The nonpartisan think tank also noted that this could understate the deficit as taxpayer behavior changes.
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Texas
A view of Austin, the capital of Texas. (iStock)
Republican government Greg Abbott aims to abolish property taxes on schools following the introduction of several measures aimed at easing the property tax burden in recent years, such as rate compression and housing exemptions.
Abbott has proposed using surplus funds from the state budget to buy off school property taxes for a period of time until they are eliminated. However, lawmakers are still debating a long-term solution for replacing lost education funding.
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Indiana
The skyline of Indianapolis, Indiana. (Getty Images)
Indiana’s HB 1288 would eliminate taxes on tangible property after December 31, 2026, while also eliminating property taxes entirely in 2027.
The proposal would aim to recoup lost tax revenue by expanding Indiana’s sales and use tax to cover most services, and the proceeds from that move would be redistributed through a local government sub-fund.
