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Property Tax Comparison By State For Cross-State Businesses

Posted by Lisa English on Nov 2, 2020 8:00:00 AM

If you’re operating your business in multiple states—or are contemplating putting down roots in another state—tax policies and obligations are probably already top of mind.

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Particularly if you’re planning to invest a substantial amount of money into a new facility, you’ll want to have a good understanding of your tax burden before you commit. But even if you’re already located in more than one state, you and your tax team are likely spending a lot of time keeping track of bills and deadlines for your various locations. Whichever situation you’re currently in, you need a resource that can help you make sense of it all.

That’s why we’ve put together the chart below featuring a property tax comparison by state. Every state has real estate tax; that’s a guarantee. (You can see a chart of commercial property tax rates for some of the largest cities in the U.S. here.) But when it comes to business personal property tax, there are no generalizations to be made—which makes things more complicated.

Keep this chart handy for future reference. It will help you know which states require greater effort and attention when it comes to taxes, and give you a place to start when comparing the personal property tax policies of each state.

Things To Know About Comparing Property Taxes By State

There are three things to highlight with regard to comparing property taxes across the states.

Some states don’t tax business personal property.

If you’re a homebuilder or a real estate investor, your taxes are more likely to be real estate-based than personal property tax-based. But if you’re planning on building a factory that will include high-value machinery, operating in a state that doesn’t tax business personal property could mean a significant difference to your bottom line every year.

Twelve states don’t tax business personal property:

  1. Delaware
  2. Hawaii
  3. Illinois
  4. Iowa
  5. Minnesota
  6. New Hampshire
  7. New Jersey
  8. New York
  9. North Dakota
  10. Ohio
  11. Pennsylvania
  12. South Dakota

Filing personal property returns is one of the most complicated pieces of the property tax cycle, so not only will this save you money, but it will also remove a sizeable chunk of your tax team’s workload.  

Your property tax software could be adding time to your daily processes—here are 12 signs indicating it's time to make a change.

Some states have a more complex tax process than others.

Property tax compliance hinges on meeting deadlines—filing deadlines, extension deadlines, appeal deadlines, and payment deadlines. The greater the variation among those dates, the harder it is for your team to keep up. In some states, it’s easier to keep up because they have at least some fixed deadlines yearly. California, for instance, has a fixed return deadline of April 1 in all parts of the state. Compare that to Maine, which has various return deadlines set by individual jurisdictions as well as various appeal and bill payment deadlines. Wherever the word “various” appears on the chart, it’s a red flag that a particular state may have a more complex tax process. (Note, however, that a state like Alaska also says “various,” but it has so few counties that the level of complexity isn’t likely to be overly burdensome.)  

In addition, you may receive multiple tax bills for a single property, depending on the state/jurisdiction your business is located in. For example, if you have two properties in Dallas County, Texas, one in the city of Mesquite and the other in the city of Grand Prairie, you would receive two bills for the property in Mesquite—one from Mesquite, which collects the taxes for the City of Mesquite and Mesquite Independent School District (ISD), and another bill from Dallas County. For the property in Grand Prairie, you’d get just one bill—from Dallas County. That’s because Dallas County collects the taxes for the city of Grand Prairie City and Grand Prairie ISD.

An accurate property tax comparison by state must also include the assessment ratio, not just the tax rate.

When comparing tax rates, be sure to compare apples to apples. Some states apply an assessment ratio to the property value before applying the tax rate.

For example, South Carolina has an assessment ratio of 10.5% for business personal property. To calculate the tax amount due, you would multiply the tax rate by only 10.5% of the total value. So if you have a property with a fair market value of $400,000, your tax bill will reflect an assessed value of $42,000 (10.5% of $400,000) and a tax due of $18,795. If you calculate the tax rate as total tax amount/assessed value, you’d end up with an incredibly high tax rate of 44.75%!

That’s why it’s important to consider the assessment ratio—the ratio of the property’s assessed valuation to its market value—for the locations you’re comparing. Some examples of states with an assessment ratio of less than 100% are Georgia, Missouri, South Carolina, and Tennessee.

Some states offer exemptions.

Another factor to consider is the availability of property tax exemptions, which remove a portion of the value of your property from taxation and lowers your overall tax burden. Of the states that do tax business personal property, many (though not all), exempt intangible assets (those not in physical form) from taxation. If you have a large number of intangibles and a low number of tangibles, this policy would be very advantageous.

Also, some localities have special exemptions. For example, states like Georgia and Oklahoma offer the Freeport Exemption, which exempts certain types of inventory from taxation. Another example is Wisconsin, which provides manufacturers with exemptions on specific property, namely machinery and equipment used exclusively and directly in the manufacturing process.

All other considerations being equal, it’s wise to seek out states with exemptions as they lower your tax bill—often by a significant amount. If you’re new to a jurisdiction, you’ll want to reach out to a consultant who has experience in identifying exemptions in your part of the country. Too many businesses aren’t familiar with certain exemptions and improperly file, so they end up paying more than necessary.

Use this handy chart to see the property tax deadlines and policies of every state you operate in at a glance.

Looking for property tax information about a specific state?

Our blog contains several articles with more detailed information about certain states; overviews and links to the full articles are below.

Maryland

While most other states require filing separate returns for every location you have within the state, Maryland requires only one return per legal entity doing business there. That single return represents all your Maryland locations, and is handled by a single state agency, the Department of Assessments & Taxation (SDAT).

The reasoning behind having a single state agency manage personal property assessments rather than multiple jurisdictions (as in other states) is consistency. “Uniformity” of assessment is required by a clause in the state constitution; decades ago it was determined that the best way to achieve that goal was to authorize one administrative body to handle assessments statewide. This system was reviewed and validated in the early 2000s, and today, all Maryland counties contribute funding for the administration of assessment laws by SDAT.

For Maryland businesses, that means fewer mailings compared to other states. Another highlight related to Maryland personal property tax: There’s a filing fee of $300. It’s the only state where businesses pay a fee to file their returns.

For more information and key dates regarding Maryland personal property tax, read the full article.

New York

New York is one of 12 states that does not tax personal property, so there are no returns to file. Only real property—the land and permanent structures attached to it—is subject to taxation.

As noted above, if your business owns a lot of high-value equipment, for example, this policy could save you a significant amount of money and time. (However, New York is also known for having a costly and complicated business tax code and some of the highest property taxes in the nation, so consider the full picture if you’re thinking of relocating there.) It’s important also to consider any personal property, trade fixtures, or tangible items that are not real property when analyzing valuation amounts. And according to the New York State Department of Taxation and Finance, “Many specific pieces of equipment, which may be considered as personal property in other states, are defined as real property under the NYS Real Property Tax Law.”

New York properties are assessed based on market value, by a local assessor. All taxable properties in a city or town are assessed at the same percentage of market value annually. (Here’s a chart of tax rates by county.) Some businesses may be eligible for exemptions or credits.

To learn more about New York business property tax, read the full article.

California

Business personal property in California is assessed each year at its full market value as of January 1. (That’s in comparison to real property, which is reassessed only when it is sold—a measure determined by Proposition 13 back in 1978.) But even though real and personal property are assessed differently, the tax rate for both types of property in the same location is the same.

Business personal property with a cost in excess of $100,000 is reported annually, but some aspects of filing, billing, and appeals are handled differently in California than they are in other states.

Help your tax team become more efficient with these three trends in tax technology.

For example, with regard to filings, California has non-taxable or exempt asset classifications that include business inventory (all tangible personal property that will become part of or are themselves items held for sale), application software (like Microsoft Excel or QuickBooks, for example), and licensed vehicles. Another thing to be aware of is California’s system for sending tax bills—they may send supplemental bills apart from the standard tax bills, sent in response to a change in ownership, new construction, or a completed property tax audit. These supplemental bills may be sent at varying points throughout the year, or even years later, so it’s critical to keep good records regarding past assessments and bills paid.

For more tips to help you stay on top of California business personal property filings, read the full article.

Texas

In Texas, business owners are required to submit a rendition statement listing classifications, costs, and acquisition years of business personal property items yearly, no later than April 1. (A 10 percent penalty is imposed for late returns.) If, in your estimation, your business assets are valued at less than $20,000, a lump sum value statement is acceptable.

Some Texas businesses may benefit from a special tax exemption called the Freeport Exemption. Inventory that resides in the state for a short period of time (175 days or less) and will be transported outside of Texas may be tax exempt. (The Freeport Exemption does not apply to oil and gas.) This could lead to a sizable reduction on your company’s inventory value and reduced taxes. If you believe some of your business assets may qualify, you must file a separate form sometime between January 1 and April 30 of the current year. But keep in mind that, even if you’re applying for this exemption, you still need to account for those assets on your actual return. If the exemption is granted, the assessor will reduce the total value by the amount of the exemption.

For two more important pieces of information about Texas business personal property tax, as well as a list of key dates, read the full article.

New Jersey

Like New York, New Jersey does not tax business personal property—save for a few exceptions. So while the majority of companies in New Jersey won’t have to worry about personal property come tax time, the same can’t be said for companies that own property in one or both of these categories:

  • Petroleum-related machinery. This includes machinery, apparatus, or equipment directly used in refining petroleum. The exception is machinery located on the grounds of a petroleum refinery that isn’t used to refine crude oil into petroleum products; these are excluded.
  • Tangible goods and chattels used in certain telecommunication contexts. Exclusive of inventories, these goods must be used in the business of local exchange telephone, telegraph and messenger systems, companies, corporations, or associations that were subject to tax as of April 1, 1997 (under Chapter 4, Laws of 1940). Also included are goods of wireless telephone companies.

As you can guess, only a small number of companies would own property in these categories, so most people consider New Jersey to be a state without personal property taxes.

Real property, however, is taxed in New Jersey. The value is determined at its market value, or “true value.” To challenge the valuation of real estate, you must demonstrate that it either doesn’t accurately represent true market value, or doesn’t meet the “common level range”—the annually derived average ratio representing the assessment level in the community in which your property is located.

For more details on personal property exceptions and installment dates for real property taxes in New Jersey, read the full article.

South Carolina

In concert with the South Carolina Department of Revenue, local governments typically assess and collect taxes on business personal property in this state. Property includes tangible items such as furniture and equipment that are owned and used by a business.

When reporting the total cost of your assets, the property value is equal to its depreciated basis, though the depreciation cannot exceed 90% of the total acquisition cost for each item. The assessment ratio is then applied, which is determined by the property classification—manufacturing, commercial fishing, and so on. In most cases, business personal property has a 10.5% assessment ratio.

Meanwhile, real property in South Carolina is reappraised every five years on a countywide basis, with a 15% cap on the increase in fair market value. The exception to this rule is the transfer of an existing interest in real property that subjects it to appraisal—an assessable transfer of interest. The value is then multiplied by the assessment ratio, which is 4% for an individual’s primary residence and 6% for other real property.

For additional information about South Carolina property taxes, including key dates for personal and real property, read the full article.

Alabama

The first thing to know about Alabama is that it has an unusual tax year compared to other states, running from October 1 to September 30. (The tax year in most states ends when the calendar ends on December 31, with some states ending a day later on January 1.)

But December 31 is still a date to keep in mind in Alabama for a number of reasons:

  • December 31 is the due date for both tax returns and bill payments.
  • The taxes you pay on December 31 are for the current year.
  • Your December 31 tax filing is for the following year.
  • Your December 31 tax filing is based on the value of the property you owned as of October 1 that same year.

For clarification, consider this example: You file a return on 12/31/2019. The return is for your 2020 taxes; however, it is based on the value of assets you owned as of 10/1/2019.

For other key pieces of information on Alabama business personal property, read the full article.

Indiana

If items you own support your business in producing income, Indiana considers them business personal property. Computers, machinery, and tools would all fit this description.

In addition, every entity—businesses, churches, and nonprofit organizations—must file an Indiana business personal property tax return each year, even if they qualify for an exemption. The exemption is $40,000 of taxable personal property cost per county, which was increased from $20,000 in 2019.

One other thing to note about Indiana’s filing process is that, unlike most states, Indiana requires certain types of assets be filed on specific forms:

  • Form 102—Farmer’s tangible personal property tax return.
  • Form 103 (Long)—Business tangible personal property tax return form used by all taxpayers that meet special conditions, such as ones claiming exemptions.
  • Form 103 (Short)—Similar to the long version, only you meet separate conditions, such as not claiming exemptions.
  • Form 104—Business tangible personal property tax return form used as a summary form for taxpayers reporting on Forms 102 and 103. Disregard this form if you are declaring the exemption for personal property.

For a tax schedule and additional tax exemptions on personal property in Indiana, read the full article.

Wisconsin

If you’re considering a business location in Wisconsin, keep in mind that the state is known for high property taxes—one of the highest in the nation. This is primarily because tax restrictions imposed by state law makes it challenging to collect funding for public services from any other source. Along with other contributing factors, local governments must rely on property tax to provide a large portion (42%) of their revenue.

Personal property in Wisconsin includes all goods, wares, merchandise, chattels, and effects of any nature or description having any marketable value (and not included in real property).

Manufacturers have a unique set of considerations when operating in the state. The most notable aspect is that machinery and equipment used exclusively and directly in the manufacturing process are exempt from property tax. However, this does not include assets such as shipping and receiving equipment, furniture, safety equipment, and so on.

For a complete list of taxable manufacturing assets and additional details on property tax dates in Wisconsin, read the full article.

Florida

If you were considering locating your business in Florida before 2006, you’d be on the line for both tangible and intangible business personal property. However, the state repealed taxes on intangibles like software that year, meaning you now only have to worry about tangible personal property like furniture and office equipment.

Note, however, that businesses pay more than half of all state and local taxes, a proportion that’s higher than the national average.

When filing your tax return in Florida, here are a few aspects of note:

  • If you file by the return deadline, you’re eligible for a Florida tangible personal property tax exemption in the amount of $25,000 for each filed return.
  • If the total value of any given return is less than $25,000, you won’t pay any taxes on that property.
  • Filing a return late results in a 5% penalty for each month, or part of a month, that the return is late. Not filing a return at all results in a 25% penalty.
  • Inventory that is for sale as part of the business is not taxable.

For more information on Florida’s property tax nuances, including discounts for paying tax bills early, read the full article.

Virginia

Virginia is known for its steady tax rate and relatively business-friendly environment, but its business personal property tax policies may take some time to get used to. Like Florida, only tangible business property is taxed—items such as machinery, fixtures, certain computer hardware, and automobiles. In addition, 45 of the state’s 95 counties impose a merchants’ capital tax, a tax on saleable merchandise.

Not all tangible personal property is treated equally in Virginia. Several categories enjoy assessment ratios that are lower by comparison:

  • Computer equipment
  • Heavy construction machinery
  • Interstate motor carriers
  • Certified pollution control equipment

For additional complexity, methods of valuing property differ depending on the type of property; the personal property tax rate is also different in every jurisdiction. Some assessors depreciate assets based on the asset type and acquisition year, while others will depreciate all assets for a particular asset type at the same percentage regardless of acquisition year.

For more information on the complexities of Virginia property tax, read the full article.

Georgia

Intangible personal property is not taxed in Georgia. Instead, property tax is a tax on the value of all real and tangible property (unless exempt).

Notably, if you believe the value calculated by the state’s schedules does not reflect a true fair market value of your company’s assets, Georgia allows you to include your opinion of fair market value on your return.

As noted above, Georgia offers the Freeport Exemption, which exempts certain types of inventory from taxation. To qualify, businesses must hold inventory in the state temporarily and have items that meet certain criteria. There are two levels to the exemption, each with their own qualification requirements.

For a full rundown of the Freeport Exemption and other property tax particulars, read the full article.

Oklahoma

Oklahoma has a low-to-moderate property tax rate and reasonable exemptions—both aspects help make the state appealing for establishing business locales. In the state, property tax is primarily administered by county assessors, except for public service corporations such as railroads and utilities. These businesses are centrally assessed by the Oklahoma Tax Commission.

Assessment ratios vary by assessor and by property type, with state-mandated limits ranging from 10% to 15%. Despite this variance, assessors must apply the same percentage to all like property throughout the county.

Similar to Georgia, Oklahoma also has a Freeport Exemption for inventory held in the state for less than nine months; note that it has its own set of qualification requirements. Oklahoma also has the Five-year Ad Valorem Tax Exemption, which includes a five-year tax abatement. This exemption applies to new, expanded, or acquired manufacturing businesses, R&D facilities, and companies in other specified business verticals.

For more information on Oklahoma’s exemptions, tax due dates, and appeal process, read the full article.

Colorado

Colorado’s property tax is a major source of local tax revenue. While most assessments are made by county assessors, there are a few exceptions, including airlines, renewable energy companies, and others. These businesses are assessed by the Division of Property Taxation.

Certain types of assets are exempt from local assessment in Colorado, including:

  • Intangible personal property
  • Software
  • Inventories of merchandise, and materials and supplies held for sale or consumption by a business

If your tax bill is greater than $25, you have the option of paying in two installments, with the first half due by the last day of February and the second half by June 15. Or, you may choose to pay it in full by April 30, which is also the due date for bills lower than $25.

For tax due dates and details on the appeal process in Colorado, read the full article.

Want to simplify your business personal property tax process no matter what state you’re in?

Regardless of what your property tax comparison by state reveals, it’s almost certain that you’re spending more time than you need to tracking dates, filling out spreadsheets, and verifying addresses. The more time you spend on those activities, the less time you have for more valuable property tax tasks—like figuring out ways to reduce your tax bills and carrying out successful appeals.

CrowdReason software can help. You won’t need charts of any kind, because we’ll track everything for you. Our TotalPropertyTax (TPT) software automatically knows whether or not personal property tax is applicable to the state you’re filing in. And it fills in all those knowledge gaps created by “various” deadlines, turning them into actual due dates—for every jurisdiction in the U.S.—you need to meet. So you’ll never have to go searching for dates and scramble to meet them; you’ll also never have to search for mailing addresses or depreciation tables, because our software handles all that, too.

TotalPropertyTax payment screen

TPT makes it easy to know when collectors will send two separate bills, like this example of a "Preliminary" bill and a "Final" bill. 
It also shows that each of those 2 bills have the option to pay in two installments, along with their due dates and payment amounts.

To find out more about how CrowdReason software can help your tax team reduce the time and effort spent filing returns, contact us or request a demo to see it in action. We’re committed to providing tools that will help you do the work you love—solving complex tax problems and minimizing property tax expenditures.

Download Now: Property Tax Comparison By State

Topics: Property tax