Property taxes are among the hottest topics in state legislatures right now—foreshadowing potential major declines in school districts’ revenue.
More than a dozen states are currently considering proposals to reform or even eliminate property taxes, which annually supply more than a third of all funding America’s K-12 schools receive. GOP politicians in particular have seized on the opportunity to use widespread dissatisfaction with higher post-pandemic property-tax bills for homeowners as a vehicle to reduce government spending, a long-standing aim.
The most dramatic proposals to zero out property taxes altogether will likely face a steep uphill climb: Voters typically reject the prospect of massive cuts to publicly funded local services. Wyoming lawmakers this week killed a proposal to eliminate property taxes statewide.
Even so, recent reforms in states like Indiana and Ohio show that more modest changes to property-tax policy can cause major strife for school finance officials.
Voters in two states already know property taxes will be on their ballots come November. Tennessee voters could make the state the first in the nation to preemptively ban a statewide property tax. And in Wyoming, voters will weigh whether to exempt 50 percent of a property’s assessed value from property taxation.
Signatures are still being collected for ballot measures on property-tax reform in several other states, even as lawmakers also workshop policy changes they can implement on their own.
Here’s a look at some of the key approaches lawmakers are taking to tackle surging property-tax bills this year.
1. Replace property taxes with other revenue sources
States considering: Florida, Georgia, Kansas, South Dakota, Texas, Wisconsin, Wyoming
How it would work: Some states want to offset a decrease in property taxes by increasing taxes on sales or income.
What it could mean: Experts say other taxes would fall well short of adequately funding vital public services like schools and fire departments. Local communities would either have to make up the shortfall elsewhere or make do with fewer services.
2. Ask voters to amend the state constitution
States considering: Kansas, Ohio, Oklahoma, Nebraska, Tennessee
How it would work: Lawmakers in some states want new constitutional language restricting lawmakers from imposing property taxes. Others want to remove existing constitutional language requiring property taxes.
What it could mean: A statewide vote in favor of eliminating property taxes would be unprecedented. Most recently, nearly two-thirds of 2024 voters in North Dakota rejected such a ballot measure.
3. Give veto power to local voters or unelected bodies
Currently in place: Georgia, Missouri, Utah
States considering: Kansas, New Hampshire, Texas
How it would work: Some states would require supermajority support from local voters to approve tax increases. Others would force school districts and local governments to conduct recurring elections asking voters to impose a ban on property-tax increases.
What it could mean: Raising taxes to expand education investments could be more challenging for some communities. For instance, several school districts in Utah lost the opportunity to levy property-tax increases after the State Tax Commission—a bipartisan group with members appointed by the governor—last fall rejected several such proposals for failing to comply with state disclosure laws.
4. Impose tax caps or expand exemptions
Currently in place: Indiana, Missouri, New York, Wyoming
States considering: Georgia, Iowa, Kansas, Oklahoma, Tennessee, Texas
How it would work: Some state laws restrict local governments from raising property taxes by more than a certain percentage each year (2% in New York and 4% in Wyoming, for instance). Others waive property taxes for certain populations, like senior citizens.
What it could mean: School districts could be forced to make tough cuts to staff and programming—or rely more heavily on uneven and messy formula-based state aid—if their local capacity to raise revenue is constrained.