Vermont has the 4th highest property tax rate in the country, at 1.76%, according to research from the Tax Foundation. We are second only to New Hampshire among the New England states, which has a property tax rate of 1.89% (New Hampshire however, has no income tax and no sales tax). We are one of only 4 states which don’t have place limitations on property tax hikes. Hawaii, New Hampshire and Tennessee are the others.
36 states, including Massachusetts, have a “Rate Limit” cap on the overall rates that can be set by local policymakers, but do not shield properties from increases due to rising values or from other policies designed to increase collections.
35 states, including Massachusetts, Rhode Island and Maine all have a “Levy Limit,” which constrains the total amount of overall property tax revenue a government can raise.
19 states, including Connecticut, have an “Assessment Limit” which restricts the amount an individual homeowner’s taxes can rise due to increases in a home’s assessed value.
These 3 types of limits are not mutually exclusive. Colorado, Arkansas, Arizona, Illinois, Michigan, Montana, New Mexico and Texas have all 3.
Deciding where to cut spending in order to lower that hefty 1.76% property tax rate to make Vermont more economically competitive with other states will be tough. In the meantime, considering one of the 3 popular property tax limitations seems like a good place to start.
To see the Tax Foundation's analysis, click here.
David Flemming is a policy analyst at the Ethan Allen Institute