The 2026 Property Tax Revolt: These States Move to End Property Taxes

0:00Property taxes have become one of the fastest growing costs of home ownership in America. They're actually up nearly 30 % since 2019. That's a national average. And now a broad political revolt is starting to take shape across the country. More than a dozen states are actively weighing proposals to limit, reduce, or fully eliminate property taxes. And some of these ideas are serious. They could actually be implemented. So the implications for the housing market and real estate investors are significant. Today on On The Market, we're breaking it down. We're talking about the great property tax revolt, how property taxes have evolved, how they're impacting the market today, what remedies are being proposed, and which ones are likely to pass.

0:47And of course, we'll talk about how this all could impact your portfolio and what you should be doing about it.

0:58Hey, everyone, welcome to On The Market. I'm Dave Meyer, investor and chief investment officer at BiggerPockets. Today on the show, we're digging into one of the biggest sticker shocks investors have been facing and dealing with in recent years, property taxes. Back in the day, I remember fondly the time when property taxes were just background noise, where you just didn't really think about it, they kind of were what they were. Now they are a major expense category and the change in property taxes and how quickly they're changing has become a constant source of stress. And it's something that investors just have to deal with more and more because property taxes are significantly impacting the overall big picture costs of homeownership in the United States.

1:48They're also impacting cash flow and overall return on investment for investors as well. And this problem is now starting to get more and more political attention. Actually, more than a dozen states now have legislation to try and figure out some level of relief for homeowners and in some cases for investors as well. And this is everything from caps on how much property taxes can go up, full on exemptions or even straight up elimination of property taxes is actually being considered in more than one state. So today on the show, we're diving into it. What's been happening? What some of the proposed solutions are?

2:30Which ones might actually pass? And how this could all impact you? Let's get to it. So first up, let's just talk about the numbers, big picture. How much have property taxes actually risen in the United States? I'm guessing if you're already an active investor or a homeowner, you know the answer and it is a lot. I'll break it down for you, but the national median annual property tax bill. So if you averaged everything in the country, what's going on right now is that from 2019 to 2023, we saw a 23 % increase in property taxes that went from about 2 ,500 bucks to over$3 ,000 a year, at least according to NAR.

3:12Now, if you actually pull out condos and attached, and you just look at single family homes, the average bill reached 4 ,300 bucks. That's up 6 % in just a year. So it's still growing faster than the regular pace of inflation. And if you extrapolate that out to duplexes, triplexes, fourplexes, commercial insurance, all of that is going up as well. So really, no matter how you look at it, taxes are going up a lot. And this is impacting everyone, all sorts of people. You hear a lot about older folks on fixed income being hit particularly hard. but I think this is just across the board. It is increasing homeownership costs.

3:49So why is this happening? Well, the answer is actually not that complicated. It's actually a pretty simple thing to figure out, but basically home prices went up. If you look at the period of time from 2019 to 2024, where taxes on average went up 27%, home prices during the same exact period of time went up 50%. And so based on the way tax policy works, when your home value goes up, your assessed rate goes up. And so your taxes go up because the way that property taxes work for pretty much everywhere in the United States is you kind of have two variables. One is the assessed value of your home.

4:32How much does the county or local government think that your property is worth? And then the amount that they tax that, you know, the average across all states is about 1 % of that assessed value per year, but that actually ranges anywhere from about 0.4 % to 2 % per year. And so what we've actually seen over these last couple of years is that tax policy has not really changed. If you look at the effective tax rate, again, that percentage of the assessed value, that has actually been relatively stable. It's actually declined in some markets. So what's causing the increase in taxes is because appraised value has gone up.

5:11Now, fortunately, research shows that for every dollar that your property increases in value, your property insurance doesn't actually go up proportionally. It only goes up about 0.3 to 0.5 % for every 1 % increase in property value. So that's actually good because you're building equity faster than your taxes are going up. So I want to just put this in the big picture. If you are a homeowner, if you've owned your property for a long time and you have seen your taxes go up, you're probably still a net winner, right? Because your equity has grown so much that your net worth, if you're judging it just by your total net worth, you're still ahead.

5:51But where the problem comes in is cashflow, right? Because your equity that you're growing is not money that's coming into you every month. And as an investor, that's a consideration. But I think it's even more of a challenge for homeowners because they're usually not making money off their properties, right? But their taxes are going up. So that means more money each and every month or each and every year is going out of their paycheck or out of their pockets and towards property taxes, even though their home equity probably has gone up. So just keep that framing in mind. But just to sort of summarize what we're talking about here, big picture stuff.

6:28There hasn't been some big shift in tax policy. It's just that home prices are way higher. And so assessed values are up. But as with everything in real estate, it is super regional how much you pay. Tax policy is very different, not just depending on state. A lot of property taxes are implemented at a county or local level as well. So where you live is really going to tell you what that effective rate is. Are you on the low end of 0.4 % per year? Are you on the high end of 2 % per year? It makes a super big difference. The highest effective tax rates, at least as of 2024, and I do not think they've changed.

7:11This is just the last month I could find data for. Illinois is at the highest effective rate at 1.8%. And we have New Jersey at 1.64. Texas, Nebraska, New York are also up there. Those are just in terms of the percentage that you pay. And I'm sure you can imagine that the two highest property tax, you know, if you just figure out the total dollar amount, it's New York and New Jersey because one, the home values are really high there and they also have really high effective tax rates. So no surprise there. In Jersey, the average tax per year is nearly$10 ,000. In New York, it's actually much lower than Jersey.

7:48It's about$7 ,500, still a ton, but way lower than 10 grand in Jersey. Now, that shouldn't be surprising. Those places have had expensive taxes for a long time. But I think what we're talking about today where there's kind of this just revolt where people are pissed straight up about property taxes, it's because a lot of places that traditionally have not had high property taxes are now seeing them. So since 2019, Colorado has seen the fastest property tax increase, 53 percent. I invest there. I can tell you historically property tax is very low there. And although the assessed value hasn't changed, 50 % increase in your taxes is going to raise some eyebrows, right?

8:30We also see Georgia at 51%, Florida at 47%, and a lot of other Sunbelt states, basically where price appreciation has been so rapid, that's where the total dollar amount you're paying per month is going up the fastest. Now, if you're curious about the lowest, Alabama, totally in a league of its own. Alabama just says we're not basically going to tax property. 0.37 is their effective tax rate. Super, super low. Let's have South Carolina, West Virginia, Delaware, Idaho, Nevada, Arizona are the ones that are really low, sort of near that 0.5 percent. Much, much lower. So things are going up. But how does this tie into the total cost of homeownership?

9:15And how does it impact the ever important stat that we talk about all the time on the show, housing affordability? Well, in 2025, the average U.S. homeowner, again, is paying something around$3 ,500 per year in property taxes. That's about 300 bucks a month and has to fit into the escrow payment that people are paying alongside their mortgage, which is principal and interest and alongside insurance. If you also have an HOA, you're paying into that as well. And so that is pretty significant, right? The average mortgage payment in the United States is about$2 ,800 right now. So the$300 is a pretty big portion of that.

9:57That is more than 10 % of your total mortgage payment. Or I could just tell you off the top of my head, back in the day, it was, I don't know, it's probably like 4 % or 5%. So it definitely has increased that. And that obviously comes out and impacts people on their monthly basis. But the other thing that I think a lot of people miss in this situation is it also is pulling people out of the housing market because for mortgage qualification purposes, lenders have to consider property taxes into debt to income calculations. Like if you go to get pre-approved, they're going to be thinking about how much you pay in taxes and what you can afford.

10:36And because taxes have risen so much, that means fewer people can qualify. The amount that people can qualify in terms of purchase price is going down because taxes are replacing that within the total calculation. And this can reduce demand, right? People are going to buy less. Just as an example, a buyer who's looking to get qualified at today's rates, six and a half percent or whatever, in a state like Illinois or New Jersey. So I'm giving you an extreme example, right? Because these are the more expensive states in Illinois and New Jersey. If you are looking at this, they're basically penalized six to eight hundred dollars per month in property taxes versus a comparable home in a low tax state.

11:20So that alone is essentially the equivalent of having one full percentage point on your mortgage added to it. Right. So instead of going to Alabama, if you're living in New Jersey, that's the same thing is basically saying, instead of having a 5.5 mortgage rate, I'm going to a 6.5 mortgage rate. That is how much it impacts housing affordability. That is really significant. Or just put it another way, right? If you moved from Illinois to Alabama for a average price home, let's call it 400K, that actually saves you roughly$6 ,760 per year or over$560 a month. And honestly, that can be the difference for a lot of people, the difference between qualifying and not qualifying for that mortgage.

12:09So, yeah, this stuff really matters for the housing market. Another thing that's impacting as well is it kind of just adds on to the entire lock in effect, right? Because now longtime homeowners who are sort of locked into low mortgage rates now face a second reason not to sell, right? They don't want to give up their assessed value. Now, different states have different rules about assessing value. Some do it every year. Some do it two years. Some do it five years. There are actually states like California or now there's a new law in Georgia that does this that has assessment caps, meaning that not only are these homeowners in a state like Georgia or California locked into a lower mortgage rate, they are locked into a lower tax rate.

12:53So So selling and moving somewhere else doesn't just mean resetting your mortgage. It also means resetting your tax rate, and that's going to go up too. So another reason we're seeing low inventory. It creates a powerful, sustained disincentive to sell, right? People do not want to sell if they're going to go move to an equivalent house and pay way more. We've been seeing that with mortgages for years, and I think we're going to see it with taxes for the foreseeable future as well. Before we move on, I just want to mention one other thing that this is also impacting renters, right? Because often those costs get passed through to tenants in the form of higher rents.

13:34And so it's not just homeowners that are being effective. This is just raising costs throughout the economy. This is one of the things that just contributes to inflation. So it's affecting everything across the board. Before we move on and sort of just talk about what states are doing about it, because I I think this is really fascinating. I just want to mention that we had a guest on the show recently, Mike Simonson. He's been on the show many times. Really great housing market analyst. He mentioned something to me that you might have picked up on. He said that in states where there are higher property taxes, housing prices are suppressed and actually makes housing more affordable.

14:10And I actually looked into it. He cited it and I sort of dug into this, but there was a paper, some research study done by the Minneapolis Federal Reserve. And what they found is that higher property taxes can actually improve housing affordability, particularly at the entry level, because they suppress purchase price, right? They keep prices down because there's this other price going on that people have to contend with. So just look at Texas, right? They have a very high effective tax rate, 1.7%. Median home price there is just$240 ,000. And so there is some research into that. I just want to call that out because people assume a high tax state, there's no benefit to that.

14:51But affordability is a benefit, right? You're paying more tax, but you're paying less in your principal and interest. That's what this Federal Reserve paper is saying, is that when you look all told, high tax is not necessarily a bad thing. Now, if you're in a state like New Jersey, kind of hard to argue there's anything really good going on there, right? You have high property values and property taxes. But when you look at the big picture, that is sometimes the effect, at least according to this paper. So I just wanted to call that out before we move on. So, so far, we've talked a lot about just general big picture stuff, how this is impacting homeowners, affordability.

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17:59Welcome back to On the Market. I'm Dave Meyer. We're here today talking about the great property tax revolt that is shaping up in the United States. Before the break, we talked about just how this is impacting the housing market in general. But I want to turn and just mention a couple quick things about how higher property taxes impact investors specifically before we get to the states that are really trying to curb this and what they're actually specifically doing it to it. So one thing is basically property taxes are factored into home values, meaning high tax areas produce lower purchase prices and low tax areas produce higher ones.

18:36Look at California, lower property taxes, higher prices. Jersey, New York, kind of an exception to that rule. But, you know, there are 50 states, so we have to look at everything. And the research shows that this is generally true. This means and pay attention to this because we're going to talk about states that are potentially lowering their tax rates. This means, according to the research, that a reduction in property taxes does tend to boost home values, right? If a state is going to lower their property taxes, that can boost home values. As an investor, that is something you should be thinking about as we talk about what the states are doing in just a minute.

19:12On the other side, though, that also means that raising taxes can dampen appreciation, which is why some economists argue high property taxes have kept its housing market relatively more affordable than sort of the growth that they've seen that a population growth, the business growth, the job growth would otherwise suggest. So again, a lot of this is academic, but I do just want to share this with you because we're talking about states really changing their policies potentially. And this could really impact prices in those markets. Now, of course, there are other things investors should be thinking about, like just total demand, right?

19:44Market desirability. If there's a really high tax environment, less people might move there. Or, you know, if you're in a really high tax city trying to flip a house, you know, during an affordability stretch time, that could impact you. Of course, also, you're going to want to think about underwriting your taxes as an investor, right? You should be looking at how frequently your taxes get assessed. I think this is something a lot of new investors really miss. You say, oh, the taxes aren't that bad, but there's states like Connecticut, for example, they have a five-year assessment period. In Connecticut, they haven't assessed in several years, but that market is booming.

20:19Prices have gone up like 30%, 40 % in the last five years. I think they're reassessing this year in 2026. So when they do that, property tax is probably going to go up 10%, 20%. This is something you need to be paying attention in underwriting. And hopefully that makes sense to everyone. Don't just take taxes for what they are today. Understand tax policy in the places that you're buying and project that forward for your own underwriting. All right. Enough with the big picture stuff. We've done the history. Now everyone understands what's happening with taxes, why this matters, and what might happen if a state changes their tax policy.

20:56So let's talk about it. What is actually happening at the state level? Well, as of early 2026, there are at least, it's kind of hard to get this information, but there are at least 12 states that are actively weighing proposals to eliminate or limit or reduce property taxes in some way, shape or form. If you're wondering what those states are, they are Florida, Texas, North Dakota, Indiana, Georgia, Wyoming, Kansas, South Dakota, Ohio, Illinois, Pennsylvania, and Michigan. Now, just politically, these do tend to be Republican led initiatives, but we're actually seeing bipartisan support for these ideas in a lot of these states.

21:40So what is actually being proposed here? Right. Because I think we've you know, most people have seen this stuff in Florida. We'll get into that where they're just saying we're going to eliminate it. But there's a very big spectrum of what is actually being proposed. The approaches range from modest adjustments all the way up to those full elimination. And within that, there are sort of like five different buckets of ideas that are being proposed. So the first is assessment limitations and caps. Again, assessment is just basically when the government, the local government goes out and decides what they think your home is worth, and then they tax you based on that.

22:18So one of the idea is limiting how much that assessed value can go up in a given year. They're basically saying they're going to cap the annual growth of assessed values. California has this. They've actually capped it at 2 % per year. Remember I was saying this is why Californians tend to be locked in, right? California home prices over the last 10, 20 years have gone up hundreds of percent, but every single year their taxes are only going up 2 % max. So they have disproportionately low taxes compared to their home values. So that is what's going on in California. Georgia actually just did something as well where they are linking the amount that they can increase assessments to inflation.

23:02So an inflation index, this is actually common. When I was living in Europe, this is sort of how they did it, not just for taxes, but for rents as well. So this is something that you see in other parts of the world. Georgia just implemented that, something like that. But basically, this is being proposed in a lot of states. The idea here is that it protects existing homeowners. I will say kind of shifts the cost burden to new buyers and to commercial property. So this is not like a free lunch here, right? We see that in California or in these other places, but it does help existing incumbent homeowners.

23:36And you could argue, I think correctly, that it probably hurts home buyers and commercial property values disproportionately. So probably going to be very popular with owners like boomers, right? They got all the money anyway, and they want to keep it, but probably not that popular with young people who want to get into the market or people who are trying to build their portfolio. The next bucket that was assessment caps, there's next something called a levy cap. This is kind of similar, but it's a little bit different in an important way. It basically caps the total annual revenue growth of the property tax total.

24:08So it basically says, you know, if you're in Youngsfield, Ohio, I don't know why I just picked that. Youngs Field, Ohio, right? And your total property tax revenue is a million dollars. It must be way more than that, but I'm just going to say a million dollars. They're going to say next year, the most it can go up to is$1.1 million. Because that assessment cap disproportionately helps existing homeowners and kind of hurts new homeowners. The idea here is that this is a more equal way to limit property taxes and to spread the tax burden across existing homeowners and new homeowners alike. So that's a popular one, gaining some steam.

24:46The third bucket is the homestead exemptions. You might live in a state, a lot of states already have this, but this is basically, a lot of states are saying, we're gonna reduce the assessed value of primary residences by a fixed amount. So Texas has done this. Indiana is working on a system like this. I know Michigan has homestead exemptions, and this is something that is going to negatively impact investors, right, but help primary homeowners. And whether you like this or not, just going to say, I do think this one is going to be popular because it is a way that you can make homeownership more affordable for local residents than investors, right?

25:28It's relatively cheaper for a resident to buy a home than an investor. And that's a way to sort of equal the playing field without banning investment altogether. So just want to call off there are trade-offs there, but my guess, homestead exemptions are going to become more and more popular, or at least homestead reductions in the assessed value. So that's something to definitely keep an eye out for. The fourth bucket is rate or credit reduction. So this is basically like applying a credit statewide against property tax bills is similar to other types of tax credits. North Dakota has a really interesting example of this.