CFED Assets & Opportunity Scorecard
Property Tax Relief
A set of state policies that assist homeowners in meeting their property tax burden, including circuit breakers and tax deferment, 2009.
Property taxes are an important revenue source for local governments, but they can be burdensome for low- and moderate-income families, particularly for those that have experienced housing cost increases greater than increases in their incomes. Furthermore, even during periods of decreasing housing costs, 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.
States are assessed on the adoption of the following direct property tax relief programs:
1. Circuit breakers: Circuit breakers are property tax relief programs that target low- and moderate-income homeowners. 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 property tax rebate or tax subsidy for qualifying households. States are assessed on three elements of a circuit breaker program:
- Is the circuit breaker state-funded? Local funding can be problematic because some local governments are better able to provide relief than others. In addition, some localities will have a higher percentage of homeowners requiring assistance. States are better suited to administer programs that redistribute income such as property tax relief.
- Are people of all ages eligible? States often provide circuit breakers for only the elderly or disabled, using those characteristics as a proxy for financial need. However, financial hardship is not limited to particular groups, and poverty rates are currently lower for the elderly than they are for working-age adults.
- Are renters and homeowners eligible? Renters do not receive a property tax bill, but it does not mean that they do not pay the cost of property taxes. Landlords pass property tax burdens on to renters through higher rent, and generally, renters have lower incomes than homeowners.
2. Tax deferrals: Property tax deferral programs allow homeowners to defer payment of all or a portion of their property taxes until the sale of their property or death. The deferred taxes become a lien against the value of the home and are, in essence, a public sector reverse mortgage. Most states target these programs towards low-income, elderly homeowners. Tax deferrals can help homeowners stay in their homes, particularly for those with high property tax burdens.
Property Tax Relief
|State||Is there a state-funded circuit breaker?||Are all eligible?||Are renters eligible?||Deferral?|
|Arizona||Yes||No (Elderly and disabled only)||Yes||Yes|
|California||Yes||No (Elderly and disabled only)||Yes||Yes|
|Colorado||Yes||No (Elderly and disabled only)||Yes||Yes|
|District of Columbia||Yes||Yes||Yes||Yes|
|Idaho||Yes||Yes (Elderly and disabled; veterans; POWs; fatherless or motherless minors; widows or widowers)||No||Yes|
|Illinois||Yes||No (Elderly and disabled only)||Yes||Yes|
|Iowa||Yes||No (Elderly and disabled only)||Yes||No|
|Kansas||Yes||Yes (Elderly and disabled; a surviving spouse of a member of the active duty military who died in line of fire; a person with one or more dependent children under the age of 18)||Yes||No|
|Maryland||Yes||Yes||Yes (Renters must be elderly, disabled, or have gross income below the federal poverty threshold and have one or more dependent children living with in the household)||Yes|
|Massachusetts||Yes||No (Elderly only)||Yes||Yes|
|Missouri||Yes||No (Elderly and disabled only)||Yes||No|
|Montana||Yes||Yes||Yes (Renters must be elderly)||No 2|
|Nebraska||Yes||No (Elderly and disabled only)||No||No|
|Nevada||Yes||No (Elderly only)||Yes||Yes|
|New Hampshire||Yes||Yes||No||Yes 1|
|New Mexico||Yes||No (Elderly only)||Yes||No|
|North Carolina||Yes||No (Elderly and disabled only)||No||No|
|North Dakota||Yes||No (Elderly and disabled only)||Yes||No|
|Oklahoma||Yes||No (Elderly and disabled only)||No||No|
|Pennsylvania||Yes||No (Elderly and disabled only)||Yes||No|
|Rhode Island||Yes||No (Elderly and disabled only)||Yes||Yes 1|
|South Dakota||Yes||No (Elderly and disabled only)||No||Yes|
|Utah||Yes||No (Elderly only)||Yes||No|
|Washington||Yes||No (Elderly and disabled only)||No||Yes|
|West Virginia||Yes||Yes||Yes (Renters must be elderly)||Yes|
|Wyoming||Yes||No (Elderly and disabled only)||No||Yes 1|
Bowman, John H., Daphne A. Kenyon, Adam Langley and Bethany P. Paquin. Policy Tax Circuit Breakers: Fair and Cost-Effective Relief for Taxpayers. Cambridge, MA: Lincoln Institute of Land Policy, 2009.
“Significant Features of the Property Tax.” Lincoln Institute of Land Policy and George Washington Institute of Public Policy. Data accessed in November 2011 at http://www.lincolninst.edu/subcenters/significant-features-property-tax/Report_State.aspx.
"—" indicates that no data is available.
1. In Connecticut, New Hampshire, Rhode Island, Virginia and Wyoming, a deferment of property tax is only available in some localities within the state.
2. In Montana and Ohio members of the military may qualify for a deferment of property taxes.
3. In Oregon, though renters are eligible for a state-funded circuit breaker, homeowners are not.