Overview of Idaho Property Tax Essentials
Idaho's property tax system includes annually determined market values, uniform levy rates, limited budget increases, and various tax relief options. The tax is levied on real and business personal property, with exemptions available. Assessment involves annual appraisal or indexing based on current market value. Significant changes in property values and taxes have occurred since 2006, including adjustments to homeowner exemptions.
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IAC CLERKS / COMMISSIONERS CONFERENCE JUNE 9, 2021 COEUR d ALENE ALAN S. DORNFEST, PROPERTY TAX POLICY BUREAU CHIEF
Idaho Property Tax Essentials Current, annually determined, market value base (except farm use value and timber formula based value) - $191.7 Billion in 2020 ($175.0 billion in 2019) Budget based: Budget $ Taxable Value = Levy Rate Uniform rate for all classes of property (minor exceptions) Independently determined rates for each of about 1,000 taxing districts Except with voter approval, annual increase in p-tax budgets ($) limited to 3% plus new construction and annexation; previously forgone increases No additional budget due to increased value of existing property. 2
Property Tax Essentials (cont.) Tax is levied on most real and business personal property Tax is generated and used locally: ~$ 4,800 (2020) to state public school income fund (taxes on small railcar companies paid directly to state) $ 1.931 Billion (2020) to local units of government $ 74 Million (2020) to urban renewal agencies Many varieties of tax relief are available Exemptions partial and full Circuit Breaker (state pays part (sometimes all) of property tax) 3
The Personal Property Tax Personal property taxes in Idaho were between $94* and $129* million out of $1.931 billion in total property taxes in 2020 (5% - 7% statewide, but much higher in some counties). In addition to furniture, machinery, and equipment, the above figure for personal property tax includes rail cars and certain other portions of operating property. Amounts shown reflect 2020 partial ($100,000 value) exemption *Includes $12 million tax on personal property paid to urban renewal agencies 4
Assessment of Property System of Valuation All real, personal and operating property subject to property taxation must be assessed annually . (IC 63-205) County assesses real and personal property STC assesses operating property - (utilities and railroads) Taxable property shall be appraised or indexed annually to reflect current market value. (IC 63-314) Appraisal includes field inspection (required at least every 5 years). Property not appraised in given year must be indexed to current market value. Current market value this year will be the value of the property as of January 1, 2021. 5
Significant Changes in Idaho Property Values and Taxes beginning in 2006 Homeowner s exemption increased 50% not to exceed upper limit Was locked at 50%, up to $50,000 from 1983 2006 Upper limit changed to $75,000 in 2006 and tied to HPI for future $89,250 in 2007 $100,938 in 2008 $104,471 for 2009 $101,153 for 2010 (given decline in HPI for Idaho) $92,040 for 2011 (given larger decline in HPI for Idaho) $83,974 for 2012 $81,000 for 2013 $83,920 for 2014 $89,580 for 2015 School general property tax eliminated in most school districts beginning in 2006 Typically had been about 19% of tax 2020: COVID tax relief of $117.6 million (32 cities and 11 counties) Total property taxes down 5.1% as a result First overall decrease since 2006 Homeowner s Exemption $130,000 $120,000 $110,000 $100,000 $90,000 $80,000 $70,000 $60,000 $50,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 6
12 Year Chart of Taxable Value Changes by Major Property Category 150,000.0 Residential 130,000.0 Commercial Agricultural M i l l i o n s o f D o l l a r s Timber 110,000.0 Mining Public Utilities 90,000.0 70,000.0 50,000.0 30,000.0 10,000.0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 (10,000.0) 7
What about primary residential property (homes)? Subset of residential class as a whole (shown on previous slide) Through 2020: Represents the largest share of property value in Idaho 44.3% in 2020 Total assessed value (net of homeowner s exemption) increased 13.2% from 2019 to 2020 Because new construction is included, existing homes increased in value about 10% from 2019 to 2020 Taxes on existing homes decreased by 5.5% See: https://tax.idaho.gov/reports/EPB00132_01-13- 2021.pdf 8
New Construction v. Changes in Existing Property Values & Taxes: 2019 2020 Category of Property Overall Percent change in Value Primary Residential (eligible for homeowner s exemption) Other Residential + 8.0% Existing Property Value % Change + 10.0% Existing Property Tax % Change - 5.5% + 13.2% + 5.4% - 7.6% Commercial and industrial + 6.7% + 3.6% - 11.5% 9
So, who pays the property tax? Distribution shown is statewide in Idaho for 2020 11
2020 Property Tax Use 3.3% $ 7.5 Mill Cemetery 15.8% $ 36.1 Mill Community. College City 24.5% $ 473.7 Mill School 30.5% $ 588.7 Mill 39.5% $90.3 Mill Fire Other 11.8% $ 228.5 Mill 41.4% $94.6 Mill Miscellaneous OTHER 11.8% County 26.8% $ 516.9 Mill Highway 6.4% $ 122.8 Mill TOTAL 12
Property Tax by District Type 2019-2020 Comparison of Total Taxing Districts Against Total Taxing Districts That Levy for Years 2019 - 2020 1/22/2021 2019 2019 Districts Levying 2020 2020 Districts Levying Number of Districts 1,106 Number of Districts 1,098 District Name Ambulance Auditorium Cemetery Cities Community Colleges Counties Drainage Fire Flood Control Highway-County Road & Bridge Hospital Infrastructure Levee Library Abatement (Mosquito) Pest Control Port Recreation School Sewer Sewer & Water Water Watershed Improvements 28 3 27 28 3 27 2 2 There are 1,098 taxing districts and 971 levied property tax in 2020. 183 201 179 192 179 200 178 192 4 4 4 4 44 1 44 44 1 44 - 157 13 76 14 - 157 13 78 14 159 15 97 15 158 14 96 16 3 1 2 3 1 2 - - 57 22 5 1 36 57 22 57 22 5 1 36 57 22 5 1 5 1 31 114 31 115 115 28 53 27 116 27 52 26 9 9 14 13 5 2 5 2 8 9 13 Totals: 970 971
Change in School Property Taxes 2019 2020 Rev. 1/22/21 14
School Supplemental Levies Most voter approved for 1 2 years (may be longer for charter school districts and permanent for some school districts) 15
Property Tax Growth Relatively Uniform (except for school funding switch to state in 2006) * Highway district totals include county road and bridge funds. $117 million in COVID related grants used to reduce 2020 property taxes 16
Measuring General Property Tax Burden in Idaho Comparisons between states and localities Comparisons over income ranges Comparisons with other Idaho taxes 17
Estimated 2019 Taxes Per Family of three - various incomes - 12.6% - 23.4% - 4.7% - 35.1% - 3.6% -48.4% - 11.7% +1% - 1.5% Estimates for Boise, based on District of Columbia study of largest city in each state. Percentages show Boise compared to U.S. average of 51 cities. 18
FY 2018 Property Tax Burden Idaho vs. Neighbor States Idaho Mt Nv Or Ut Wa Wy Based on taxes per $ of income. 19
FY 2018 Overall Tax Burden Idaho vs. Neighbor States Idaho Mt Nv Or Ut Wa Wy Based on taxes per $ of income. 20
Idaho Property Tax per $1,000 Personal Income 21
Per Capita Property Taxes Idaho vs U.S. Adjusted for Inflation Based on U.S. Census Information Amounts adjusted to January 1977 22
Boise Homeowner Property Tax 1980 vs. 2020 Value (average sale): $ 45,587 Tax: 1980: $ 484 Value (average assessed): $ 378,803 Tax: (Ada average urban rate)$ 3,940 2020: 2020: Value adjusted for inflation to 1/1980 $ 114,228 Tax adjusted for inflation: $ 1,188 Constant dollar annual increase: 2.2% 2020 values based on 2019-20 sales. 23
PROPERTY TAXES by Major Category of Property Constant 1978 Dollars Millions of dollars 24
Limits on Property Tax Budgets ($) Levies (rates) Exemptions Tax relief measures 25
How do Property Tax Budget Limits Work? Apply only to property taxes used for non- exempt funds (mostly general operations) Permit increases in property tax $: Up to 3% over highest of last three years Plus 90% of new construction value X 2021 prelim levy rate But only 80% of increment value for dissolved urban renewal RAAs Plus 90% of annexation value X 2nd prelim levy rate The sum of the above items cannot exceed an 8% increase Plus previously accrued forgone amount may increase budget up to 1% or 3% for capital projects 4% in total if both Or, all forgone may be taken if 3%, NC, Annex increases not taken Allowed only if result does not create levy rate that exceeds statutory limit 26
2019 2020 Property Tax Change Components New Construction GPSGI Grants for tax relief Boise SD M&O School exempt levies 3% increases 27
Property Tax Relief Measures State or local funds dedicated to reducing property tax May be related to use ie: appropriation to community colleges including statement of reduction of property tax; May be related to taxpayer circumstances ie: circuit breaker property tax relief for lower income, elderly, and disabled. May be indirectly related distribution of state sales tax partly based on business inventory property values existing prior to business inventory exemption. May relate to taxes or fees paid solar farms pay 3.5% tax on gross solar farm earnings the amount reduced maximum property tax allowed for local districts receiving this money 30
Common Business Property Tax Incentives $100,000 personal property exemption IC 63-602NN investment exemption (unlimited $, but 5 years maximum duration) Urban Renewal increment value growth generates revenue for specific projects in certain areas based on most underlying tax levies 31
Circuit Breaker (Property Tax Reduction Program) Up to $1,500 (new for 2021) credit for eligible homeowners: Over age 65, disabled, widows and widowers Income up to $31,280 for 2020 program ($31,900 for 2021 program; received in 2020, after medical expenses) And up to additional $1,500 for 100% disabled veterans (no income test) Must annually apply with county assessor by April 15th. (May 17th 2021 only) 2020 claims 29,253 approved (includes new disabled vets. qualifiers) $ 706 tax relief per claim average (2020) $ 20.6 Million paid by state to taxing districts (2020) State funded, so no loss of revenue to any taxing district. Not an exemption, so no property tax shifted to other property taxpayers. Not subject to repayment! 32
Property Tax Deferral Since 2006, Taxpayers receiving circuit breaker benefits can opt to defer any property taxes not paid by that program. Requires equity in the property. Deferral can last as long as the taxpayers continue to live in the home and receive circuit breaker benefits. State will pay taxes, which are to be paid back (plus interest but no penalty) after sale, etc. 2020 3 households approved $2,054 in total benefits paid Claimants who otherwise qualify for circuit breaker could apply for deferral with income up to $46,488 in 2020 for 2021 benefits 33
