CFED Assets & Opportunity Scorecard
|Property Tax Relief|
States that Provide Property Tax Relief via Well-Targeted Circuit Breaker
Property taxes are an important revenue source for local governments, but they can be a heavy burden for low- and moderate-income families, particularly those whose housing costs have increased faster than their incomes. Even in periods when home values decline, tax burdens may continue to rise due to the way states and localities calculate property tax. States have used many strategies to reduce property tax burdens, including those that provide relief more widely to all homeowners, e.g., homestead exemptions and assessment caps. More effective, however, are programs targeted at homeowners that need relief most.
What States Can Do
Property tax “circuit breakers” provide households with direct property tax relief that increases as household income declines. Circuit breakers kick-in when property taxes exceed a certain percentage of a household's income and provide a rebate or tax subsidy for qualifying households. Although states often use age (i.e., being elderly) or disability as a proxy for financial need, property tax circuit breakers that are available to lower-income working-age homeowners and renters better target community need.
Strength of State Policies: Property Tax Relief
|Does the state provide property tax relief via a well-targeted circuit breaker? 1|
|California||Elderly and disabled only|
|Colorado||Elderly and disabled only|
|District of Columbia||All groups eligible|
|Illinois||Elderly and disabled only|
|Iowa 3||Elderly and disabled only|
|Kansas||Elderly, disabled, persons with one or
more dependent children under age of 18
|Maine||All groups eligible|
|Maryland||All groups eligible|
|Michigan||All groups eligible|
|Minnesota||All groups eligible|
|Missouri||Elderly and disabled only|
|Nebraska||Elderly and disabled only|
|New Hampshire||Homeowners only|
|New Jersey||Homeowners only|
|New Mexico||Elderly only|
|New York||All groups eligible|
|North Carolina||Elderly and disabled only|
|North Dakota||Elderly and disabled only|
|Oklahoma||Elderly and disabled only|
|Pennsylvania||Elderly and disabled only|
|Rhode Island||All groups eligible|
|South Dakota||Elderly and disabled only|
|Vermont||All groups eligible|
|Washington||Elderly and disabled only|
|West Virginia||Elderly, disabled, or
|Wisconsin||All groups eligible|
|Wyoming||Elderly and disabled only|
Notes on the Data
1. "Significant Features of the Property Tax," Lincoln Institute of Land Policy and George Washington Institute of Public Policy. (Accessed June 29, 2013). States receive credit if they: a) offer a state-funded property tax circuit breaker and b) open program eligibility to working-age, non-disabled homeowners and renters. All states offering property tax circuit breakers impose income-based eligibility restrictions. CFED does not take any income limits imposed by the state into account when grading this policy measure.
2. Hawaii offers a state-funded circuit breaker program, but each county applies its own qualifications. In Maui, all homeowners are eligible; in Honolulu, only elderly residents qualify. The circuit-breaker program is not in place in all counties.
3. Beginning in 1995, an Iowan who has attained the age of 23 or a head of household and was not claimed as a dependent on any other person's tax return for the base year is eligible by statutes for this program if they meet income requirements. However, the state has never provided funding for this portion of the program.
What States Have Done
Although 34 states provide some form of property tax circuit breaker, in only 10 are renters and working-age homeowners eligible to receive the credit.