Minnesota Findings from Our 2014 50-State Property Tax Comparison Study

We released our annual 50-State Property Tax Comparison Study this week.  Find out how taxes on Minnesota's homes and business properties compare to the rest of the nation.

 

The 2014 edition of MCFE’s 50-State Property Tax Comparison Study has now been published by the Lincoln Institute of Land Policy.  It’s the fourteenth edition in the series and the fourth we have produced in conjunction with the Institute.  The full report is available through the Lincoln Institute’s “Significant Features of the Property Tax website (http://www.lincolninst.edu/subcenters/significant-features-property-tax/)

Each year we also publish our own issue brief summarizing and highlighting key Minnesota-related findings. This year’s highlights include:

  • Burdens on Minneapolis homeowners are relatively average.  When we set the home value for the largest city in each of the nation’s 53 property tax systems at the median value – which allows for comparisons of homeowners in similar situations – the tax burden in Minneapolis is $2,905, $208 above the national average.  However, the effective tax rate (taxes compared to home value) is 1.468%, about 4% below the national average.  In other words, although property taxes on the median-valued home are higher, Minneapolis’ relatively high home values result in a lower effective tax rate.
  • Property taxes on commercial properties in Minnesota continue to rank high in both urban and rural settings.  For $1 million- and $25 million-valued commercial parcels, taxes on Minneapolis properties ranked sixth, down one spot from last year, and were 20% to 25% above the national averages.  In our rural city rankings, commercial property taxes in Glencoe ranked 2nd highest nationally at the $1 million and $25 million level – unchanged from last year – and were 85% to 95% above the national averages.
  • Minnesota’s statewide general property tax has significant implications for business property tax competitiveness.  Its elimination would reduce the tax on $1 million and $25 million commercial parcels in Minneapolis from 60-65% to 20-25% above the national average.  Similarly, eliminating the statewide general property tax would reduce burdens on $1 million and $25 million commercial properties in Glencoe from 85%-95% to 45%-50% above the average.
  • Minnesota’s business subsidization of local homeowner property taxes is 13th highest in the nation.  A $1 million commercial property in Minneapolis paid 115.7% more in local property taxes on its share of property value than a homeowner in the median-valued home.  This level of local property tax subsidization is the highest recorded in the study since payable 2002, before the effects of the 2001 property tax reforms were fully implemented.