Even if you’ve paid off your mortgage or have low monthly payments, property taxes can certainly put a dent in your finances–especially if you’re a senior relying on a fixed income like Social Security benefits. The good news: States around the U.S. are increasingly offering tax relief for older Americans to ensure their primary property stays affordable for them. Keep reading to learn more about property tax discounts for seniors, how they work and what your next steps should be for applying.
What are property tax discounts for seniors?
This form of tax relief can take the form of exemptions, deductions, credits, tax freezes and even deferral programs. The goal for all is the same: Give senior citizens a break on paying taxes on their home. By decreasing the amount they have to pay in taxes, it puts more money back in their pocket—especially if their mortgage is paid off.
Every program (which differs on a state-by-state basis) can offer its own unique benefits. For example, Proposition 60 and 90 in California could be categorized as a property tax freeze. It allows seniors (55 years of age or older) who are downsizing, relocating or moving closer to family to transfer their existing property tax base to a new home of equal or lesser value.
“This means that instead of being taxed at today’s higher home values, your new property taxes may be calculated based on the value of your original home,” says real estate expert Heather Myers, co-owner of the Snyder Real Estate Group. “That can result in thousands of dollars in savings each year, which is especially helpful for those living on a fixed income.”
In other cases, seniors may be able to get an exemption, which can reduce your home’s assessed value and drop your overall tax bill. Tax credits are also a common form of tax relief. These subtract a specific amount from the total tax amount you owe each year.
Who qualifies for property tax relief by state
In order to be eligible for a discount, you first must be of the minimum age as determined by your state or jurisdiction. But it’s not unusual for there to be other criteria, as well.
“Senior exemptions are typically available for property owners aged 65 and older,” shares Colton Pace, founder and CEO at the tax preparation service Ownwell. “While the specific qualifications for senior exemptions vary by state and sometimes by county, these exemptions generally require that the property is the senior’s primary residence.”
In most cases, your income must also be under a certain level to qualify. This makes it an especially helpful option for those on a tight budget.
More than 30 states have chosen to offer an exemption, freeze or credit. Here’s a look at what’s available currently for senior citizens:
- Alabama: Exemptions from the state portion of property taxes.
- Alaska: Exempts the first $150,000 of assessed home value.
- Arizona: Freezes the property value of a primary residence.
- Arkansas: Freezes the assessed value.
- California: Allows seniors to transfer their existing property tax base to a new home of equal or lesser value.
- Colorado: Exempts 50 percent of the first $200,000 in value of the primary residence.
- Connecticut: A credit up to $1,250 for married couples and $1,000 for single seniors.
- Delaware: A tax credit for the portion of the property tax bill that supports school funding.
- District of Columbia: A 50 percent property tax reduction.
- Florida: An exemption of up to $50,000.
- Georgia: A $4,000 exemption from county taxes.
- Idaho: A property tax reduction ranging between $250 and $1,500 on the home and up to 1 acre of land.
- Indiana: A $14,000 reduction of the assessed value of a qualifying home.
- Iowa: Exempts $6,500 of the taxable value.
- Kansas: A credit for up to 75 percent of the taxes on a primary home.
- Kentucky: A $49,100 exemption of assessed value.
- Louisiana: Freezes property tax assessments and exempts the first $75,000 of a home’s value from property taxes.
- Maine: A credit for a portion of the property tax or rent paid during the tax year.
- Massachusetts: A maximum credit of $2,730 (for tax year 2024).
- Michigan: A credit of up to $1,200, based on the amount property taxes exceeding 3.5 percent of income.
- Mississippi: Exempts $7,500 of assessed home value.
- Missouri: A credit of up to $750 for renters and $1,100 for seniors who live in their home.
- Montana: A credit up to $1,150.
- Nebraska: Property tax reductions on primary residence.
- New Jersey: Reimburses 50 percent of property tax bills, with a cap of $6,500 (in 2024).
- New Mexico: A credit of up to $250 (or $125 for married couples filing separately).
- New York: Up to 50 percent exemption of a home’s assessed value.
- North Carolina: Exempts the greater of $25,000 or 50 percent of the home’s assessed value.
- North Dakota: Homestead property tax credits and renters’ credits.
- Ohio: A $26,200 exemption of assessed value.
- Oklahoma: The Senior Valuation Limitation freezes the fair cash value of a qualifying home
- Pennsylvania: Rebates ranging from $380 to $1,000.
- South Carolina: Exempts the first $50,000 in fair market value.
- South Dakota: A yearly refund of property taxes.
- Tennessee: Reimburses a portion or all of property taxes as a credit.
- Texas: Requires school districts to offer an additional $10,000 homestead exemption for seniors. Local jurisdictions may offer an additional exemption of at least $3,000.
- Utah: Offers a maximum property tax credit for renters of $1,259.
- Washington: Three tiers of exemptions based on combined disposable income.
- West Virginia: A property tax credit up to a maximum of $1,000.
- Wisconsin: Homestead and school property tax credits.
Each state has its own specific criteria, so it’s a good idea to do research about the programs where you live.
When does it make sense to apply?
Wondering if these property tax discounts are a good fit for you? As long as you are eligible based on your state’s criteria, experts say there are usually no downsides to utilizing the discounts!
“Seniors should take full advantage of this tax relief once they reach the qualifying age, especially since high property taxes are continuing to eat into many retirees’ savings,” suggests Pace. “Any exemptions or discounts can help reduce annual costs.”
However, some programs may not be beneficial in the long run. This is the case for the unique property tax freeze offered in California, for example.
“If you plan to pass your home down to your children, they can only keep your lower property tax base if they make the inherited home their primary residence within one year of the transfer,” cautions Myers. “This can be a crucial financial decision for families planning to keep real estate in the family long-term. If they plan to rent it out or use it as a second home, the property will likely be reassessed at full market value—leading to a much higher tax bill.”
How to apply for a senior property tax discount
When you’re ready to file for a property tax discount, it’s often a good idea to talk with a real estate professional and/or tax adviser to walk you through the process. “It’s not complicated, but there are deadlines and documentation requirements that must be met, so it helps to have a trusted advisor in your corner,” says Myers.
Plus, a tax advisor can help you maximize savings so you can take full advantage of the exemption or credit.
“If you’d like to pursue the process yourself, we recommend visiting your county assessor’s website for specific information on how to apply,” adds Pace. “The qualifications and application process can differ depending on where you live, so checking the assessor’s website will be your best source for starting the process.”
This will also give you an idea if you can complete an online application or if you need to mail in your paperwork.
Once the paperwork is processed, you’ll be able to enjoy the savings!
