Only Hawaii and Alabama have lower effective property tax rates. The average Colorado rate is 0.52% of home value, versus a national average figure of 1.15%, so we average less than half.
There is variance within Colorado, of course, with Grand Junction at the low end, at 0.42%, Denver at 0.56% and Douglas County highest at 0.63%. But, even with this variation, all of these Colorado communities feature taxes all well below national averages.
When I moved to Denver from the East Coast in 2003, I was struck by the low property taxes – I have joked that a “zero was left off the end of my taxes” or more accurately perhaps that a “one was left off of the front of that figure.” This research supports that perception by showing that average property tax rates in New Jersey (and in Texas and in Illinois) are 4 times higher than in Colorado.
No one likes to pay taxes, and property taxes can be especially hard on senior citizens in an environment where housing values are soaring (like Denver metro in recent years) and they are on a fixed income. To address this, many states, including Colorado, have some form of a senior citizen property tax abatement program. And, rising property values are good for home owners generally, even if they aren’t cashing out and moving elsewhere.
Residential property taxes are so low in Colorado because of the combination of the Gallagher Amendment, TABOR and the School Finance Act. Since TABOR passed in 1992, Colorado has gone from a low-average tax and spending state to a low-low tax and spending state. As a result, our roads, schools and colleges are quite underfunded, compared to other states.
Most state rely on a mix of income taxes, sales taxes, property taxes, and other things to pay for public services. Colorado’s property taxes are particularly low, putting more pressure on other revenue sources.