NAHB analysis of the Census Bureau’s quarterly tax data shows that $703.5 billion in taxes were paid by property owners in the four quarters ending Q2 2021.^[1]  Four-quarter property tax revenues have climbed 13.2% since decreasing 0.2% in Q2 2020 (the first decrease since 2012).

Year-over-year growth of four-quarter property tax revenue has accelerated each of the past four quarters.  Prior to the most recent three quarters, year-over-year growth had not exceeded 10.0% since 2009.

Corporate income tax revenues made up only 5.5% of state and local tax receipts, but increased a record 71.0%, year-over-year, as the comparison quarter was the trough of the pandemic-related economic decline. Individual income (+35.5%), property (+13.2%), and sales taxes (+10.2%) also increased over the year.

Property taxes accounted for 38.2% of state and local tax receipts, a 2.8 percentage point decline over the previous quarter. In terms of the share of total receipts, property taxes were followed by individual income taxes (30.6%), sales taxes (25.7%), and corporate taxes (5.5%).

The ratio of property tax revenue to total tax revenue from the four sources shown above remains slightly above 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, by nature, 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.

 
[1] 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. Owner-occupied and rental housing units combine to make housing’s share the largest among these subgroups.

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