Property tax comparison by state

This blog post has been revised. It was originally published June 30, 2023.

• Growing your business is usually good news — but operating in multiple locations can significantly increase property tax compliance complexity.
• Failing to keep up with your property tax obligations can result in penalties, reputational harm, government liens or foreclosures, and audits.
• Different jurisdictions have different rules, rates, even filing deadlines — see below for a handy state-by-state chart that outlines key details.
• Automating your property tax compliance with AI-powered solutions from Avalara reduces your risk of penalties, and can free people and resources for more profitable initiatives.

Owning and managing property or a business in multiple states is typically a good thing — it can mean you’re growing organically or that you’ve made strategic acquisitions to broaden your footprint.

However, a broader footprint can mean bigger challenges, particularly when it comes to obligations such as property tax.

That’s because property tax compliance across states means dealing with a dizzying array of different laws, due dates, rates, and filing requirements — not only in the various states, but also in the jurisdictions within those states, such as counties. The process often involves handling numerous documents, creating a complex and burdensome task.

We’ve put together a handy state-by-state property tax guide to provide an at-a-glance view of some of the most important details, giving you a clear idea of what to do to stay compliant as your business grows.

First, though, let’s talk about some property tax basics.

What is subject to property tax

For businesses, property tax is generally levied on two distinct types of property: real and personal.

• Real property taxes:
  • Include land, plus the buildings and fixtures permanently attached to it
  • Are assessed on agricultural, commercial, industrial, residential, and utility property
  • Apply in all 50 states
• Personal property taxes:
  • Include movable items such as machinery, fixtures, and other equipment — property not permanently affixed to land
  • Are assessed only on property used in business
  • Apply in 43 states

Why property tax compliance is important

Failing to pay, paying late, or even underpaying your property taxes can significantly impact your business. Here are just a few of the potential unpleasant consequences:

• Government tax liens or foreclosures
• Financial penalties and accumulated interest charges
• Audits or investigations by tax authorities
• Damage to your reputation in the community

Which types of businesses should be concerned about property tax compliance

Companies of all sizes can face new property tax obligations in a variety of scenarios, such as when they acquire other companies, expand into new jurisdictions, or purchase major assets. Even if a business doesn’t own real estate, they could be subject to personal property tax.

Why it’s all so complicated

Because there are so many jurisdictions that bill for property tax, a business with multiple locations (especially in multiple states) can be faced with many different bills — all reflecting different rates, rules, or even payment processes. And allocation compliance comes into play if a property spans jurisdictions (such as a building or lot with a county line running through it), requiring the owner to pay taxes based on portions of the property in each jurisdiction.

What’s worse, this is still largely a paper-based system, meaning most of these bills arrive via mail. Large companies can receive literally thousands of property tax bills each year. But wait, there’s more! Companies may have to prepare, file, print, and mail personal property tax returns. And, to protect against overpaying, they should also review assessments to identify opportunities for appeals.

Even if your business isn’t dealing with thousands of bills or personal property tax returns, it’s still important to stay on top of your due dates and understand your obligations. That’s where solutions such as Avalara Property Tax can help — using AI-powered automation, it captures and validates historical tax rates and other key data points from over 20,000 assessing and collecting jurisdictions. The software simplifies due date tracking and also helps automate data entry to improve accuracy, streamline bill compliance, and reduce the risk of human error.

Wondering whether personal property is taxable in the states where you operate? Need a breakdown of deadlines and dates for returns and assessments? We’ve got you covered with the chart below.

(Would you rather not deal with it at all? Consider Avalara Property Tax Managed Services.)

Though you can’t control how states determine tax rules — and you definitely can’t avoid paying your property tax — you can simplify the complexity of managing your obligations with Avalara Property Tax, Avalara Property Tax Returns Pro, and Avalara Property Tax Managed Services.

That means you can skip looking up due dates, forms, mailing addresses, and depreciation tables — and spend your time on more valuable tasks, like reducing your organization’s tax liability or growing your business.

Does my business need to worry about property tax?

Most likely — especially if it owns property and equipment. If you have multiple locations, particularly in different states, property tax gets even more complex. Acquiring another company or expanding into new jurisdictions are scenarios that also can increase your obligations.

What does property tax include?

All states levy taxes on your real property, meaning your business’s land, buildings and permanent fixtures. Most states (43 currently) tax personal property — movable items used for your business, such as machinery.

How do I know what I owe?

Each jurisdiction will value your property and send you a bill in the mail (this system is mostly paper-based). Even if a bill never arrives — if it gets lost in the mail, for example — you still must pay your tax. That’s why it’s important to know deadlines and other details about your obligations. See above for a state-by-state chart with helpful information.

Can Avalara help me manage my property tax?

Yes. And in addition to reducing your stress level, Avalara Property Tax, Avalara Property Tax Returns Pro and Avalara Property Tax Managed Services can lower your risk of penalties and help your business operate more efficiently.

Updated September 21, 2023.