Minnesota’s average effective property tax rate of 1.19% is the 20th highest in the United States. There are two types of property taxes in Minnesota. First, a levy is applied to the property’s taxable market value based on the home’s class. Residential property is assessed at 1% on the first $500,000 and 1.25% on everything else above $500,000. Second, a market value levy is typically voter-approved and varies from county to county. All property taxes are collected on a county level.

Counties With Highest and Lowest Property Taxes

Hennepin County and Traverse County assess the highest 2016 average effective property tax rates in the state at 1.32%. However, Traverse County’s median property tax payment is $2,159 lower due to lower median home values. Grant County and Lincoln County impose an average effective rate of 1.3%. Carver County has the highest median annual property tax payment at $3,151. Hennepin County comes in second with a median payment of $3,037, while Scott County has the third-highest median tax payment of $2,988.

As of 2016, Aitkin County assesses the lowest average effective property tax in Minnesota at 0.46%. Cook County and Cass County have the net two lowest rates at 0.48 and 0.57%, respectively. However, none of these three counties has the lowest median tax payment. That honor goes to Kittson County, where the median tax assessment is $704. Koochiching County levies a median payment of $722, and Marshall County assesses a median payment of $748.

Neighboring States

Minnesota has a lower average effective property tax rate than its neighbors. The closest rate is found in North Dakota, where the average is 1.22%, for 18th highest in the nation. South Dakota assesses a comparable tax rate, as its average property tax rate is 1.36%. Iowa has the 14th-highest property tax assessment with an average rate of 1.47%. However, all these states trail Michigan and Wisconsin, where the average property tax levies are 1.83 and 1.97%, respectively. Michigan has the fourth-highest property tax rate in the country, while Wisconsin has the third-highest rate.

Nationwide Comparison

Minnesota’s median annual property tax payment of $2,098 is the 19th-lowest levy in the nation. An average of 3.1% of individual income is paid each year in property taxes. This is the 21st-lowest ratio in the country.

Economic/Regulatory Explanations

Minnesota alleviates some property tax burden by assessing an income tax and a sales tax. Minnesota’s income tax brackets range from a levy of 5.35 to 9.85%. Meanwhile, the state sales tax is a fixed rate of 6.87%. In addition, Minnesota assesses a vehicle property tax rate of 1.3%. These taxes, in addition to property taxes, are used to fund numerous state and local programs and operations. However, taxes collected in Minnesota are heavily concentrated to fund public education and health care, where Minnesota boasts some of the best results in the country.

The reason Minnesota assesses relatively high property taxes is to fund schools and health care. Early childhood development and education for students receive 34.9% of taxes collected, and the total dollar amount of school funding is 18th-highest in the U.S. Evidence to support the higher property taxes is seen in the results; pupils in Minnesota averaged the third-highest test scores in mathematics and the fifth-highest on the SATs.

In addition, Minnesota is ranked as having one of the top health care systems in the U.S. WalletHub ranked Minnesota as having the fifth-best health care system as well as being the fifth-best state in which to have a baby. This is, at least in part, due to Minnesota spending 24% of all collected tax revenue on its health care system.

Missouri Property Tax Guide

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