This glossary contains key property tax terms to help U.S. homeowners better understand property tax laws, exemptions, and the national movement to reform property taxes—or even abolish—property taxes.
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Property Tax Glossary
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A
Ad Valorem Taxes
Taxes based on the assessed value of property, such as property taxes and vehicle registration fees.
Assessment Appeal
The process by which homeowners challenge their property’s assessed value if they believe it is too high.
Assessment Increase Caps
Legal limits on how much a property’s assessed value can rise each year, regardless of market conditions. Example: California’s Prop 13 cap of 2% annually.
Assessed Value
The dollar value assigned to property by a tax assessor, used to calculate property taxes.
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C
Cadastral Surveys
Official maps that record property boundaries and ownership, forming the basis of property tax rolls.
California Proposition 13
A landmark 1978 law capping property tax rates at 1% of assessed value and limiting annual assessment increases to 2%.
Circuit Breaker (Property Tax “Circuit Breaker”)
A tax relief program that refunds or reduces property taxes when they exceed a certain percentage of household income.
D
Direct Taxes
Taxes paid directly to the government, such as property taxes or federal income taxes.
E
Eminent Domain
The government’s right to take private property for public use, with compensation to the owner.
Excise Taxes
Taxes on specific goods or services (e.g., alcohol, tobacco, fuel). Sometimes called “indirect taxes” or “sin taxes”.
F
Federal Income Tax
The progressive tax levied by the federal government on individual and corporate income.
Fee Simple Ownership
The most complete form of property ownership, granting full rights to use, sell, or pass down the property—still subject to property taxes.
Florida DOGE (FAFO: Florida Agency for Fiscal Oversight)
A proposed agency in Florida to oversee fiscal transparency and property tax reform.
Florida Homestead Exemption
A constitutional protection that reduces taxable value by up to $50,000 and limits annual assessment increases to 3% for primary residences.
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H
Homestead Exemption
A property tax exemption that lowers the taxable value of a primary residence. Rules vary by state.
I
Indirect Taxes (Excise Taxes)
Taxes collected indirectly through goods or services, passed on to consumers (e.g. gas tax).
Income Tax (State)
A tax imposed by individual states on personal income. States like Florida and Texas do not levy one, relying more heavily on property taxes.
Itemized Tax Deductions
Specific expenses—like mortgage interest or property taxes—that can be deducted instead of taking the standard deduction.
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K
L
Land Value Tax (LVT)
A tax applied only to land value, not buildings or improvements. Advocates argue it discourages speculation.
Levy Limits
State laws that restrict how much local governments can increase property tax levies each year.
Liens
Legal claims on a property due to unpaid debts or taxes, which must be cleared before selling or refinancing.
M
Mill Rate (Millage Rate)
The property tax rate applied to assessed value. One mill equals $1 of tax for every $1,000 in value.
N
New York STAR Program (School Tax Relief)
A program that reduces school property taxes for eligible New York homeowners, with enhanced relief for seniors.
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P
Payroll Taxes
Taxes withheld from wages for Social Security and Medicare. Often compared to property taxes in fairness debates.
Progressive Taxes
Taxes where higher earners pay a larger percentage of income. Federal income tax is an example.
Proportional Taxes
Also known as flat taxes, these impose the same rate regardless of income or property value.
Property Tax Levy
The total amount of property tax revenue a local government needs to raise, divided among taxpayers.
Q
R
Reassessments
Periodic updates to property valuations for tax purposes. Can cause sudden increases in tax bills.
Redemption Period
The time allowed for property owners to repay delinquent taxes and reclaim property sold in a lien or deed sale.
Regressive Taxes
Taxes that place a heavier burden on lower-income earners, such as property taxes that do not scale with income.
Rollback Rate
The property tax rate needed to generate the same revenue as the previous year, excluding new growth.
S
Shifting Tax Burdens
Occurs when reductions in property taxes result in higher taxes elsewhere, such as sales or income taxes.
Special Assessment Fees
Charges for specific neighborhood improvements, such as sewer lines, sidewalks, or lighting.
Standard Tax Deduction
A flat deduction that reduces taxable income, claimed instead of itemized deductions.
State Income Tax
A tax on income collected by states. Some states with high property taxes also levy income taxes.
T
Tax Deed Sale
An auction where a property is sold due to unpaid taxes. Buyers receive a tax deed, often wiping out mortgages.
Tax Deed States
States where delinquent taxes allow governments to sell properties outright at tax deed auctions.
Tax Lien States
States where unpaid taxes result in liens sold to investors, who can collect interest or foreclose.
Tax Swaps
Replacing property taxes with other forms of taxation, such as sales or income taxes.
Texas Property Tax Exemption
A $100,000 homestead exemption (as of 2023), plus additional exemptions for seniors and disabled veterans.
Truth-in-Taxation
A requirement in some states that governments clearly disclose proposed property tax increases and hold public hearings.
U
Unrealized Gains (Taxation on)
The concept of taxing increases in property or asset value before a sale. Critics say this creates unfair “phantom taxes.”
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Property Tax FAQ for U.S. Homeowners
1. Why are property taxes controversial?
Property taxes are controversial because they are based on property value, not income. This means retired homeowners, or those on fixed incomes, can face rising tax bills even if their income does not increase. Critics call this unfair and argue it can make homeownership unaffordable.
2. Can property taxes be abolished?
Yes. Several states, such as Texas and Florida, are debating reforms that could replace property taxes with sales taxes, state income taxes, or other funding sources. However, eliminating property taxes entirely is difficult since they fund schools, police, fire departments, and local services.
3. What is the difference between a tax lien state and a tax deed state?
- Tax Lien State: Delinquent property taxes result in a lien sold to investors, who earn interest or may foreclose.
- Tax Deed State: The property itself is sold at auction if taxes remain unpaid.
4. What are property tax “circuit breakers”?
A circuit breaker is a tax relief program that caps property taxes when they exceed a certain percentage of a homeowner’s income. These programs protect low-income and elderly homeowners from being taxed out of their homes.
5. How often are properties reassessed?
Reassessment schedules vary by state and county. Some areas reassess annually, while others reassess only after a property sale or major renovation. Caps like California’s Prop 13 or Florida’s homestead limits restrict how much assessed values can rise each year.
6. What happens if I don’t pay my property taxes?
If you fail to pay property taxes:
- A lien is placed on your property.
- Depending on your state, the lien may be sold to investors (tax lien state) or your home may eventually be sold at auction (tax deed state).
- Homeowners usually have a redemption period to pay overdue taxes before losing the property permanently.
7. Do property tax exemptions really help?
Yes. Programs like the Florida Homestead Exemption, Texas Homestead Exemption, and New York STAR Program reduce taxable value, lower tax bills, and sometimes cap annual increases. These exemptions can save homeowners thousands of dollars over time.
8. What is a mill rate, and how is it calculated?
A mill rate (or millage rate) is the tax rate applied to property value.
- Example: A mill rate of 20 mills means you pay $20 in tax per $1,000 of assessed value.
- A $250,000 assessed property with a 20-mill rate owes $5,000 in property taxes.
9. Are property taxes considered regressive?
Yes, many experts classify property taxes as regressive, since they take a larger share of income from lower-income homeowners than from wealthier ones. Reformers often push for progressive alternatives, such as income-based taxes.
10. What is a “tax swap”?
A tax swap occurs when one type of tax (such as property tax) is reduced or eliminated and replaced by another (such as sales or income tax). For example, Texas has debated reducing property taxes in exchange for higher sales taxes.
Pro Tip: If you’re concerned about high or rising property taxes, check whether your state offers exemptions, circuit breakers, or appeal options. These can significantly reduce your tax burden.
