Aug 23, 2023 - Real Estate

Detroit's property tax rate leads the nation

Effective property tax rate for a median-valued home, 2022
Data: Lincoln Institute of Land Policy; Note: Among the largest cities in each state, as well as Washington, D.C.; Aurora, Ill.; and Buffalo, N.Y.; Chart: Kavya Beheraj/Axios

The effective property tax rate for a median-valued home in Detroit was 3.21% in 2022.

Why it matters: That's the highest among major cities and double the national average, according to a new report from the nonprofit Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.

  • The "effective" tax rate measures the tax bill as a percent of the property's market value.

Driving the news: Detroit's sky-high property tax rates have long been a burden on residents. They've fueled a recent push for reform through a split-rate tax that would lower what owners of occupied homes and improved properties pay while increasing taxes on blighted, unused land and parking lots.

  • Mayor Mike Duggan told the Free Press recently that the proposal announced this spring is still on schedule.
  • It requires state and local approvals and would then be rolled out from 2025 to 2027.

The big picture: Cities with high property tax rates generally have low home values, which then drive up the tax rate needed to raise enough revenue. Detroit did this over the decades as people moved out, a tactic that worsened the problem by increasing foreclosures and making even more people leave the city, per another Lincoln institute report.

  • The cities with the highest effective property tax rates are among those with the most poverty.
  • Wealthy cities like Salt Lake City, Denver and Boston have the lowest effective rates.
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