Delaware has one of the lowest property tax rates in the nation. In 2016, the average effective property tax rate paid by Delaware residents was 0.43%. There are multiple factors that explain this low rate, such as the state’s policy on reassessing property values and the benefits it receives by treating corporations favorably. Based on the state’s current structure, Delaware does not rely on property tax collections as a main revenue stream.

Average Property Taxes

Delaware’s average effective property tax rate of 0.43% is the fourth lowest in the country. An average property tax payment in Delaware represents 1.6% of an individual’s annual income. This ratio is the eighth-lowest ratio in the country. The median property tax payment made in Delaware is the 13th lowest, at $1,078.

Property Taxes by County

The lowest property taxes in Delaware are found in Sussex County, where the average effective property tax rate is 0.31%. The median annual property tax payment in Sussex County is $740. As of 2016, Kent County had an average effective property tax rate of 0.46% and a median property tax payment of $917. Finally, New Castle has the highest property tax rate at 0.64%, and highest median property tax payment in the state at $1,582.

Neighboring States

All of Delaware’s three neighboring states assess higher property taxes than Delaware. The closest rates are found in Maryland, where the average effective tax rate is 1.08%. This is the 26th highest rate of the 50 states. Pennsylvania’s average effective property tax rate of 1.51% is the 38th highest in the country when excluding the District of Columbia. New Jersey not only has the higher property tax rate, but it also has the highest average effective property tax in the country. In 2016, the average rate was 2.29%.

Property Value Reassessment Policy

Delaware’s property taxes are assessed by the county, not the state. One factor behind this is Delaware's somewhat unusual policy of basing property taxes on the property value calculated during the last reassessment year. As of 2016, the reassessment year for Kent County is 1987, New Castle is 1983 and Sussex County is 1974. Any additions or upgrades made to property are reassessed to determine what the property’s value was in the last reassessment year. This is one indicator of why Delaware’s property taxes are so low – they are based on outdated value assessments and are being calculated using deflated dollar values.

Other Tax Collections

Delaware’s personal income tax progresses to a top bracket of 6.6% of an individual’s wages. This top bracket applies to taxable income over $60,000. Personal income taxes are the highest source of revenue for the state, as collections often top $1 billion, including $1.14 billion of collections in 2014. After winnings are deducted, Delaware collects 43 cents from every dollar played at casinos. In 2013, this resulted in collections of over $235 million. Finally, Delaware also has a gross receipts tax that may be assessed at a rate higher than 2%, depending on the good being sold. Because Delaware receives revenue support from citizens in other ways, property taxes are not as relied upon for receiving funding.

Benefits From Corporations

Not only is Delaware home to the most Fortune 500 companies, but it is also the state with the most corporations. This is due to favorable legislation regarding the establishment and operation of a business incorporated in the state. This results in unique revenue streams for Delaware. For example, the state collects corporate franchise fees – sometimes upwards of $180,000 from a single corporation – so the entity may continue enjoying favorable Delaware taxes. In addition, all abandoned property from businesses incorporated in Delaware flow to the state. Therefore, while Delaware has low property tax collections when compared to other states, it has other revenue streams to compensate for it.

Georgia Property Tax Guide

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