In 2015, property taxes in Pennsylvania were a bone of contention between legislators and private groups who advocated abolishing revenues that fund a large piece of public school budgets in the state. Democratic Governor Tom Wolf, in the midst of a prolonged budgetary standoff with the Republican legislative majority, seeks hikes in personal income and sales taxes for 2016-2017, proposing an 11% hike in wage taxes and extending the state's 6% sales tax to cable television services and movie tickets. The Pennsylvania Taxpayers Cyber Coalition (PTCC) has been lobbying to completely eliminate school taxes by likewise shifting the tax burden, expected to reach $14.18 billion by 2017. Narrowly defeated in November 2015, the PTCC backs Senate Bill 76, a proposal that seeks to raise sales taxes 1%, or 2% in Pittsburgh and 3% in Philadelphia, over the current level while also raising state wage taxes to 4.34%, effectively eliminating the tax levied upon homeowners.

One of the main arguments by the PTCC for eradicating school tax is the disproportionate share of property taxes realized by senior citizens who face annual increases that cut into fixed incomes. Furthermore, the group takes issue with rising numbers of statewide tax sales that often force homeowners out of dwellings in which residents spent most of their lives. State Sen. Mike Folmer, a Republican from the 48th legislative district in Lebanon County and a proponent of eliminating school tax, chides opponents of SB 76 in a 2015 missive, stating the opposition provides no valid or specific counterproposal. Rather, the parties against eliminating school tax merely offer sweeping generalizations pledging a "responsible approach" utilizing "sustainable and proven strategies."

Property Tax Rates in Pennsylvania

The median property tax rate in Pennsylvania is $2,223 per year for a home that holds a median assessed value of $164,700 in 2015. Tax rates are expressed in mills or $1 for each $1,000 of assessed property value. Each county in the state has its own methodology for determining assessed property values that include county, municipal and school taxes. Therefore, a fair comparison for taxation among all counties is based on the effective tax rate or what percentage of a home's median value is spent annually on property taxes. Essentially, a $3,000 tax levied on a home with an assessed value of $200,000 produces an effective tax rate of 1.5%, or (property tax/assessed property value)*100.

The highest effective property tax levels in the state are seen in Allegheny County, anchored by the city of Pittsburgh, where the median assessed value of a home, last assessed in 2012, is $122,400, with a median annual tax payment of $2,649, or a 2.16% average annual effective tax rate. By contrast, Bedford County, just south of Altoona and bordering Maryland to the south, has an effective rate of 0.91% on a median home value of $120,200.

Pennsylvania Taxes Compared to Neighboring States

Using the effective tax rate, comparisons can be made to levels in states that border Pennsylvania. While New York City has one of the highest costs of living in the United States, its effective tax is 0.72%. This is less than half the 1.58% average rate in the rest of the state, which sits 7 basis points above the 1.51% average rate in Pennsylvania for 2016.

Maryland ranks tied for 27th in the nation for effective property tax rates among states in 2016. With a 1.08% rate, the state nonetheless has counties such as Montgomery, just north of Washington D.C., that have some of the highest median home values in the nation. In Montgomery County, where the median home value is $446,300, a homeowner pays a median annual tax of $4,123.

National Property Taxes Versus Pennsylvania's Rates

Pennsylvania has the 39th highest effective tax rate in the United States at 1.51% of median assessed home value. The national average rate in 2014 was 1.29%, which is 22 basis points lower than Pennsylvania and higher than the average annual rates of 35 of the 50 states and the District of Columbia. Many Pennsylvanians primarily clamor for reform to school tax, the largest component of a resident's annual property tax bill. Seeing the power of school districts to continually raise taxes to state-allowed maximum thresholds, residents are left to wonder how and when relief might come.

Vermont Property Tax Guide

Related Articles
  1. Taxes

    5 State Tax Issues For When You Leave the Military

    When you're budgeting for post-military life, certain state tax issues need to be considered.
  2. Taxes

    10 Best States for Property Taxes in 2016

    Whether you are thinking of moving or just curious to see whether your state is in the top 10, these rankings are eye-opening.
  3. Taxes

    How Much Tax Do You Really Pay?

    When you add direct and indirect taxes together, your real tax rate is much more than you expected.
  4. Taxes

    Taxes: Who Pays And How Much?

    When it comes to taxes, the debate is endless on who pays what, especially in Congress. With no new initiatives in sight, let's take a look at who is paying now.
  5. Taxes

    Use Tax Vs. Internet Sales Tax: How Are They Different?

    Learn about the differences between a use tax and an Internet sales tax. Find out about transactions in which the taxes apply, and to whom they apply.
  6. Insights

    What Do American Companies Actually Pay In Tax?

    Spoiler alert: U.S. companies don't pay 35% in corporate tax.
  7. Financial Advisor

    What to Know Before Moving to a Lower-Tax State

    Moving to a state with different tax rules can be very tempting. Here are some things you should consider before moving for tax purposes.
  8. Taxes

    How Tax Cuts Stimulate the Economy

    Learn the logic behind the belief that reducing government income benefits everyone.
  9. Taxes

    How the GOP Tax Bill Affects You

    Here's how the new tax bill changes the taxes you file in 2018.
  10. Retirement

    Consider the Costs of Your Retirement Location

    Where you officially call home can make a difference in your retirement lifestyle, as it impacts your taxes and other cost of living factors.
Trading Center