While property taxes are essential for funding public services like education, infrastructure, and emergency response, skyrocketing rates have made homeownership increasingly unaffordable in many regions. This has prompted a growing number of states to rethink their approach.

Over the past five years, real estate taxes have surged nearly 30% nationwide, with monthly median bills now around $250, according to Redfin. In response, states including Florida, Illinois, Kansas, Montana, North Dakota, Pennsylvania, and Tennessee are all taking a closer look at reforms—and in some cases, full repeals—of these taxes, as reported by Realtor.com.

Balancing Relief With Responsibility

Reducing property taxes can provide much-needed relief to homeowners, but doing so without compromising essential public services is a delicate balance.

“There are meaningful benefits to making property taxes more affordable, especially as values continue to climb,” said Susan Wachter, a real estate finance professor at the University of Pennsylvania. “However, cutting too deep can force municipalities to either reduce services or find revenue elsewhere—neither of which is easy.”

What’s Happening in Each State

Here’s how various states are approaching property tax reform:

Florida
Florida has taken a bold step by proposing the complete elimination of property taxes in favor of a broader sales tax model. This initiative would require a constitutional amendment with at least 60% voter approval. Governor Ron DeSantis has voiced support for this shift, calling property taxes one of the more burdensome forms of taxation.

Idaho
Idaho has already passed a bill aimed at easing property tax pressure, directing $100 million in relief to residents. Governor Brad Little praised the move, emphasizing that lower taxes help keep communities strong and attractive for families and businesses alike.

Illinois
Lawmakers in Illinois are considering a bill that would give long-term homeowners a break. Senate Bill 1862 aims to reduce property taxes for residents who’ve owned and lived in their homes for 30 years or more.

Kansas
Kansas lawmakers introduced a bill to create a citizens’ board to review property tax exemptions. However, the effort hit a roadblock after legislators failed to reach consensus before the end of the session.

Montana
Montana has passed new legislation that provides tax relief to full-time residents while shifting more of the burden onto owners of high-value second homes and vacation properties.

North Dakota
North Dakota recently expanded its primary residence tax credit, tripling the benefit for homeowners. Governor Kelly Armstrong has hinted at even bigger ambitions—possibly ending property taxes altogether by leveraging the state’s oil revenue.

Pennsylvania
A proposal from Republican Rep. Russ Diamond could lead to the elimination of property taxes in Pennsylvania by 2030. The plan is laid out in House Bill 900, which is currently being reviewed.

Tennessee
Tennessee voters will decide in November whether to approve a constitutional amendment banning property taxes. The measure, having already passed in the state legislature, would prevent future lawmakers from imposing such taxes.

Cities Facing Property Tax Headaches

It’s not just states taking action—cities are also feeling the pinch. In Boston, falling commercial real estate values are shifting a major tax burden onto homeowners. With about a third of Boston’s tax revenue coming from commercial properties, declining valuations have resulted in higher bills for residents. Efforts to reform the city’s tax code have so far fallen short.

In New York City, property tax assessments are based on neighborhood trends rather than individual property data, creating unequal burdens. The NYC Advisory Commission has proposed changes aimed at improving fairness by revising property classifications, removing assessment caps, and adopting a more transparent valuation process.

What This Means for Real Estate Investors

For property investors, lower taxes typically mean stronger cash flow. But it’s important to look at the full picture. Reforms may be focused primarily on owner-occupants, not investors—though some investors, such as those living in multi-unit buildings or operating short-term rentals, might still benefit.

Investors should also regularly challenge property tax assessments. The National Taxpayers Union Foundation reports that a significant percentage of U.S. properties—between 30% and 60%—are overassessed. Yet fewer than 5% of property owners file appeals, even though many who do see reductions.

Bottom Line

States are beginning to take significant steps to rethink how they fund local services without overburdening property owners. For real estate investors, this evolving landscape could bring new opportunities—but also calls for a strategic, well-informed approach to maximize returns while staying ahead of policy changes.