The ITEP Guide to State & Local Taxes
Property & Wealth
How Do Real Property Taxes Work?
Property taxes on land and buildings are the oldest and still the largest major revenue source for state and local governments. They fund schools, health care, public safety, and other services. They are collected mostly by cities, counties, school districts, and other types of local government, but states typically make the rules for assessing the value of property and imposing the tax, with major implications for tax fairness and adequacy.
How Do Personal Property Taxes Work?
The great majority of property tax revenue is based on the value of land and buildings, but states also apply property taxes to certain business equipment, machinery, and supplies, and sometimes also to automobiles. Collectively these taxes are known as “personal property taxes.”
How Do State Estate and Inheritance Taxes Work?
Estate and inheritance taxes are taxes on wealth passed on after someone’s death. They are a common way for states to tax the inheritances of wealthy individuals. These taxes ensure that those very large estates help pay for public services like schools, hospitals, and parks.
How Can Communities Collect Property Taxes from Exempt Nonprofits?
Payment in Lieu of Taxes (PILT or PILOT) programs allow local governments to collect revenue from nonprofits that otherwise would not be contributing to the cost of providing local services. Every state has chosen to exempt most non-profit entities from local property taxes. A building owned by a charitable organization may be exempt from tax […]
How Can Cities and States Reduce Property Taxes for Homeowners and Renters?
To reduce the cost of property taxes for homeowners and renters, many places offer homestead exemptions, circuit breakers, and deferrals. Such provisions are more cost-effective alternatives to broad tax cuts or tax limitations.
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