Property Taxes are Largest Share of State and Local Tax Receipts

Property taxes accounted for a whopping $672.5 billion state and local tax receipts between the fourth quarter of 2020 through the final quarter of 2021, according to NAHB analysis of the Census Bureau’s quarterly tax data.

As NAHB tax economist David Logan reports in a recent Eye on Housing post, property taxes constituted 36.2% of state and local tax receipts, a 0.8 percentage point decrease over the prior quarter. In terms of the share of total receipts, property taxes were followed by individual income taxes (30.5%), sales taxes (27.1%) and corporate taxes (6.2%).

The ratio of property tax revenue to total tax revenue from the four sources shown above dipped slightly below its pre-housing boom average of 37%.

The share of property tax receipts among the four major tax revenue sources naturally changes with fluctuations in non-property tax collections. Non-property tax receipts — including individual income, corporate income and sales tax revenues — are much more sensitive to fluctuations in the business cycle and the accompanying changes in consumer spending (affecting sales tax revenues) and job availability (affecting aggregate income).

In contrast, property tax collections have proven relatively stable, reflecting the long-run stability of tangible property values as well as the smoothing effects of lagging assessments and annual adjustments.