The three largest states in the Union have initiatives that could affect their residents’ property tax bills for 2022:
1. New York has plans to give homeowners with incomes up to $250,000 a Property Tax Relief credit on their income tax returns. That would be allowed “if their total property tax exceeds a fixed percentage of their income.”
The goal is to target New York families who have high property tax as well as an income tax burden. Officials expect an average tax break of about $340. Homeowners will be able to claim the credit for taxable years 2021 through 2023.
2. Texas voters will vote in May to increase the state’s homestead exception for school districts from $25,000 to $40,000. Voters, who are expected to approve this constitutional amendment, will save an average of $176 per year.
While Texans pay the 7th highest rate of property tax in the country, they don’t pay state income or vehicle property taxes. The property taxes go toward crucial services as well as funding schools and libraries in local communities.
3. California taxpayers will vote on two ballot initiatives aimed at controlling increases in property taxes:
- The Taxpayer Protection and Government Accountability Act. This will require that any changes to any laws that result in a tax increase must pass both houses of the state legislature by a two-thirds majority AND be approved by California voters.
- The Tax Cut and Housing Affordability Act. This will add a 1 to 1.2% surcharge on high-value residential properties. Those would be properties are currently assessed at $5 million and above. That surcharge is targeted to fund tax credits of up to $2,000 for low- and middle-income renters and homeowners. The new law will also raise the homestead exemption from $7,000 to $200,000.
California’s overall property taxes rank below the national average with a rate of 0.73%, as compared to the national rate of 1.07%. Homeowners pay property taxes based on the purchase price of the property, with a nominal 2% annual increase cap.
Should Everyone Else Be Worried About Rising Property Taxes?
According to Barrons.com, rising property values “will likely increase property liability, but that won’t happen automatically.”
The good news is that most homeowners “won’t see a change in the assessed value of their home until their local assessor deems fit.” But that could be “this year, or it could be five years from now, depending on the schedule of the assessor’s office.”
The bad news is that by the end of the year, “median (property) prices in the U.S. are expected to be up 12%.