Written by: Patrick Price
The Council on State Taxation (COST), the State Tax Research Institute (STRI), and EY have recently published their comprehensive study on Total State and Local Business Taxes (SALT) for the 2021 fiscal year. While the full study can be accessed here, we’ve outlined some of the more prominent highlights related to property tax below:
- Revenue collections from taxing business property increased by 11.9% for FY21, to $368.8 Billion despite it being the second year of the pandemic. It’s apparent that businesses did not get the relief to which they were entitled or to a magnitude that was warranted.
- Property taxes accounted for 38.8% of all state & local taxes paid by businesses while comprising 77.8% of all business tax revenue at the local level. They make up only 2.6% of business tax revenue at the state level.
- For the state, the largest sources of revenue from businesses are the Sale & Use Tax (30.3%), Corporate Income Tax (20.9%), and Individual Income Tax on Business (11.1%).
- Of all property taxes paid, businesses comprise 54.9% of state & local property tax collections, while households paid the remaining 45.1%.
- Local property tax collections were 12.1% higher in FY21 than in FY20, reflecting the lagging effect of this taxation system. Despite value diminution and impairments, this decline in FMV did not translate to a reduction in property tax assessments or collection.
- Oregon, Idaho, and California saw the largest YoY growth or increase in Total Business Taxes, for various reasons (mostly unrelated to property tax). For example, Oregon’s 25% increase was in part due to the implantation of their modified gross receipts tax (CAT).
- There is a large disparity among the states when it comes to how much of the Total State & Local Tax Burden is borne by businesses versus households. For example, businesses pay more than 60% of the total in New Mexico, North Dakota, and Wyoming, while they pay less than 40% of the total in Utah, North Carolina, Maryland, and others. Of course, this encompasses all taxes, not just property tax, and comprises both state and local levels.
If your corporate property taxes were affected in the 2021 fiscal year, DMA’s property tax experts can help. Working alongside your team, we will leverage jurisdictional knowledge to help you through every aspect of your property tax filing including assessment review and appeal, tax compliance, and property tax audit management. Ready to get started? Contact us for more information.