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We bought a house in 1971 for $59,000. The property taxes were $2,700 a year. We lived there until 2018. We sold the house for a little over $500,000. In 2026 that property is assessed at $483,000 and the taxes are $15,000 a year. The average annual increase in property taxes is about 3.17%.
Over the same period (1971 to 2026), the average annual U.S. inflation rate (measured by the Consumer Price Index, or CPI) was approximately 3.92% per year.
Over 35 years tax increases did not outpace inflation.
A similar pattern of property tax changes will continue in the future. For sure we know they will increase. If we had stayed in that house in retirement, the tax bill would not be an afterthought. My retirement would have to consider that expense and the likely increases.
That scenario applies to anyone with a house who retires. People routinely factor inflation in retirement planning. Certainly property taxes are significant in that planning. There are no surprises here.
They had $X income before retirement and paid their bills including taxes. They have $X income after retiring and still must pay their bills. There is no shifting insurance premiums, or car payments or any other bills to younger families. Why should property taxes be different? Upon retirement adequate income is necessary or lifestyle adjustments must be made. That is applicable at virtually any income level.
The other argument goes that survivors (typically widows) have a harder time paying the taxes because of reduced income. If we learn anything from participating on HD, it’s about planning for the vicissitudes of life, survivor income is part of that planning – I hope. I know many on HD delay SS for that reason, more income for a surviving spouse.
The current popular focus on property taxes is a red herring, it’s popular to rant against any taxes – without considering the consequences to the local community and beyond.
Unfortunately, the anti-tax argument greatly overstates the amount of taxes involved in most parts of the country and also the number of foreclosures that result in anyone losing their property – which is less than 1% and it is even rarer that a persons personal residence is involved.
That is not harsh, its reality.
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Since we bought a house in 1996, tax increases per year were capped whereas both general inflation and home prices increased (except for a few years) without any limit. Two of the largest public increases have been health insurance and busing costs in the public schools. This has caused deficits of more than $20M per year in the school district and has required cutting programs, teachers, and services. Besides being bad for kids, it’s only a matter of time before this hurts property values and general quality of life. Yet people complain about the taxes even though the rate of property taxes is almost half of when we bought 30 years ago.
What I think is wrong with property taxes is they can be very regressive. They are a wealth tax that hits working and middle classes much harder than the rich.
Say someone is paying property taxes of 1% on an assessed house value of $600K. They just started out, so have only $20K equity in the house, and maybe $80k other net worth.
So they are paying a 6% wealth tax — $6K
on $100K net worth.
No multi-billionaire pays even close to a 6% wealth tax.
At this time, income taxes are regressive. Wealthy people take far too many deductions. The top rate is too low. And Social Security taxes shouldn’t be capped below $1M.