NAHB analysis of the Census Bureau’s quarterly tax data shows that $707.6 billion in taxes were paid by property owners in the four quarters ending Q3 2021 (not seasonally adjusted), a 0.5% quarterly decline.^[1]  Four-quarter property tax revenues had climbed 14.3% since decreasing 0.2% in Q2 2020. The decline in Q3 2021 was only the second such decrease since 2012.

Property taxes accounted for 38.5% of state and local tax receipts, a 0.2 percentage point increase over the prior quarter. In terms of the share of total receipts, property taxes were followed by individual income taxes (29.5%), sales taxes (26.5%), and corporate taxes (5.6%).

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%.  Quarterly corporate income tax revenues were steady as a share of the total, accounting for 5.6% of state and local tax receipts (NSA).

Year-over-year growth of four-quarter property tax revenue had accelerated in four consecutive quarters preceding Q3 2021. After increasing a record 76.1% in Q2 2021 (yoy), four-quarter corporate income tax revenue increased 51.0% in the third quarter. Individual income (+18.9%), property (+12.4%), and sales taxes (+13.0%) also increased over the year.

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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