State Requirements Under Truth in Taxation Laws for Property Taxes

The United States has seen very rapid growth in housing values recently, with housing prices increasing roughly 46 percent from January 2020 to December 2023, corresponding to an average annual growth rate of 9.9 percent. While this expands local governments’ property tax base, many taxpayers fear that this could also lead to a steep rise in their property tax bills.

Truth in Taxation measures, also known as Full Disclosure, prevent “silent” tax increases that occur when increases in property values result in higher tax bills without any change in the official tax rate. Truth in Taxation provisions ensure that rising property values do not automatically generate increased tax revenues for local governments without taxpayers’ knowledge. They require taxing entities to disclose any proposed increases in property tax revenues, whether due to increases in tax rates or property values.

This paper identifies Truth in Taxation states and presents key elements of Truth in Taxation laws in each state, so readers can understand how states have implemented Truth in Taxation in various ways. Some key takeaways from this paper include:

• Twenty states have adopted some form of Truth in Taxation law, which prevents silent tax increases. In other words, these states require disclosure anytime there would be a silent tax increase.
• A jurisdiction’s property tax levy can rise due to an increase in the value of existing properties (a.k.a. a silent tax increase), an increase in the tax rate, or new construction and improvements to existing properties. There are four main ways Truth in Taxation disclosure procedures are triggered: when there is a silent tax increase or tax rate increase(eight states); when any increase in the tax levy is proposed (two states); every time a property tax levy is proposed (nine states); and when a jurisdiction-wide reassessment occurs (one state). In addition to these four triggers, three states impose an additional requirement to initiate Truth in Taxation disclosure procedures: the proposed tax increase must exceed a predetermined percentage of the prior year’s levy, allowing a small-scale silent tax increase without disclosure.
• Thirteen states require calculation of a rollback rate, the tax rate that would raise the same amount of revenue as the prior year, while seven states employ other methods to disclose proposed property tax changes. The rollback rate allows taxpayers to know in a simple, clear way if a property tax increase is proposed for existing properties as well as if a silent tax increase is proposed.
• Fifteen states mandate publication of one or more notices in newspapers regarding the proposed property tax levy and public hearings on it, and six states require a mailed notice with parcel-specific specific property tax information. Three states grant taxing entities the option of either publication of notice in newspapers or a mailed notice with aggregate tax and levy information. Fifteen states require a separate Truth in Taxation notice.
• Nine states require local governments to hold separate hearings on the proposed property tax levy. In four states, Truth in Taxation hearings are combined with budget hearings, while six states grant local governments an option to hold Truth in Taxation hearings separately or as part of budget hearings.
• Fourteen states require a vote by the governing body to exceed the rollback rate, making it impossible for local policymakers to passively let taxes increase when property values rise.
• Four states restrict local governments’ authority to impose large property tax increases, even after following other Truth in Taxation requirements for disclosure and public hearings. The limit on the increase varies from state to state, from more than 3.5 percent to 15 percent above the prior year levy.

This paper summarizes the Truth in Taxation laws based on three key requirements:
(1) calculation of a rollback rate, (2) mailed notices with parcel-specific information, and (3) a vote by the governing body to exceed the rollback rate. Four states have Truth in Taxation laws with all these requirements: Florida, Kansas, Nebraska, and Utah. Nine states have Truth in Taxation laws with two requirements: Delaware, Georgia, Iowa, Kentucky, Michigan, Tennessee, Texas, Virginia, and West Virginia. Three states, Arizona, Minnesota, and North Dakota, have one requirement. Four states have Truth in Taxation laws with none of these key requirements: Illinois, Missouri, Nevada, and Rhode Island. Although these states lack any of the three requirements, they still have disclosure requirements such as publication of notices in newspapers and public hearings to prevent silent tax increases and hence qualify as Truth in Taxation states.

In contrast to tax limits, Truth in Taxation measures do not prevent tax revenue from increasing, provided that local governments comply with disclosure requirements. Truth in Taxation grants local governments the discretion and flexibility to adopt tax revenue increases that align with local needs and preferences, as long as taxpayers are informed of the proposed tax increase and have an opportunity to weigh in on the proposal at a public hearing.