According to NAHB tabulations of the Census Bureau’s quarterly data, property taxes constituted 39.7% of state and local tax receipts among major sources for 2014. Sales taxes had the second largest share at 27.8%, followed closely by individual income tax at 27.9%. At 4.6%, corporate income taxes held the smallest share of state and local tax receipts among major sources.
Further gains are expected in all tax receipts as the economic recovery strengthens, however state and local individual income tax, corporate income tax, and sales tax collections are particularly responsive to changing economic conditions.
Gains in state and local individual income tax, corporate income tax, and sales tax collections had outpaced increases in property tax receipts until recently. This trend pushed the property tax share of total receipts from the four major sources from a high of 44.9% in the third quarter of 2010 to just below 40% as of the end of 2014. The share did stabilize recently as property tax revenues continue to grow. The current property tax share remains higher than pre-housing boom measures.
Revenues from property taxes totaled just under $498 billion for 2014.
Lagging property assessments and annual adjustments smooth property tax collections across business cycles. Nominal property tax collections are not as prone to cyclical fluctuations as other tax collections and have tended to increase with minor business cycle fluctuations.
* Data footnote: Census data for property tax collections include taxes paid for all real estate assets (as well as personal property), including owner-occupied homes, rental housing, commercial real estate, and agriculture. However, housing’s share is by far the largest when considering the stock of both owner-occupied and rental housing units.