Study shows assessment caps left recent buyers paying far more than long‑time neighbors
New homeowners in some US cities faced dramatically higher property tax bills than their neighbors in 2025, with assessment caps pushing more of the burden onto recent buyers even when homes were worth roughly the same, according to a new 50‑state comparison.
The annual study by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence analyzed effective property tax rates in more than 100 cities, covering homestead, commercial, industrial and apartment properties for taxes paid in 2025.
It pointed to four levers that largely determined local tax burdens: how heavily cities relied on property taxes, underlying property values, the level of local government spending, and whether homesteads were taxed more lightly than other property types.
“Assessment limits are often presented as straightforward tax relief but our annual analysis continues to show that assessment limits have a number of negative consequences––they create large disparities in tax bills for similar homes and shift the burden to new homeowners,” Adam H. Langley, associate director of tax policy at the Lincoln Institute of Land Policy, said.
“As more states look to adopt these policies, our data shows clearly what the trade‑offs are and who ends up paying the price,” he said.
In Miami, for example, the owner of a newly purchased median‑valued home would have faced a 2025 tax bill 3.2 times higher than that of an equally valued home bought in 2012 – about $10,024 versus $3,166 – because the older owner’s taxable value remained capped.
Property tax burdens diverged sharply across large cities. The average effective rate on a median‑valued homestead in the largest city in each state stood at 1.213% in 2025, or about $2,426 on a $200,000 home.
Detroit, Aurora, Ill., and Portland, Ore., all had effective homestead rates at least twice that average, while Honolulu, Billings, Mont., Denver, Salt Lake City, Boston, Charleston, S.C., and Huntsville, Ala., were at half the average or less.
The report also found that commercial real estate shouldered a significantly higher load. Across the largest city in each state, commercial properties faced effective tax rates that were, on average, 82% higher than those on homesteads, as more jurisdictions used classification systems to shift taxes away from owner‑occupied homes.
“Property taxes are the backbone of local government finance, and this report gave policymakers, residents, and businesses the clearest possible picture of how these taxes actually worked in practice,” Mark Haveman, executive director of the Minnesota Center for Fiscal Excellence, said.
“What stood out year after year was how much the design of the property tax system mattered. These choices had real consequences for housing affordability, business competitiveness, and fiscal equity, and understanding each of these factors was the first step toward improving them,” he said.
For mortgage professionals, the findings fed directly into the growing problem of escrow “payment shocks” as taxes and insurance reset.
A 2025 analysis found that 57% of surveyed borrowers saw escrow increases over the prior year as taxes and insurance climbed, adding strain even for fixed‑rate borrowers whose principal and interest payments did not change.
The Lincoln Institute study also highlighted how state‑level reforms could quickly reset tax burdens.
In Billings, a new graduated property tax structure for 2025 sharply reduced effective rates on homes worth $400,000 or less and produced what the report described as the largest drop in median tax bills among the cities studied.
The change cut taxes for lower‑priced homes while raising them on the most expensive properties.
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