Taxes are an unfortunate necessity of life, regardless of how unpleasant they might be. They are the funds that governments use to pay for public services and programs that make up essential parts of our daily life. Just about everyone in the United States has heard of state income tax, but you may find yourself wondering about the different rules and regulations that apply in different areas. One of the largest questions about taxes in the US is why property taxes differ by state. Today, most of the costs are based on real estate property, however some states also tax certain personal property items.

Property Tax Assessments

One of the reasons why property taxes differ by state, is that the local governments assess the values of property according to different and fluctuating standards. Throughout America, the local governments use the revenue that is taken from real estate property taxes as a method of funding public services, like law enforcement, fire protection, schools and roadwork. Without consistent property taxes, most governments, regardless of the state concerned, would have trouble keeping essential services running, as the revenue accounts for approximately 50% of the funds raised by local governments.

Similarly to the way a country has its own limits and borders, property is divided into different assessment units and areas throughout a state and then added together. An assessment area may include a county, city or school district. A tax assessor which has been appointed by the government, will assess the value of every property subject to tax in a particular area.

In order to adjust or set a tax rate, a specific government will be required to look at how much money can be taken from different sources of revenue, including state aid and sales taxes. This amount will then be compared to the budget that the government has for the entire year. The amount of cash that is needed to fill the space that exists between the revenue and the budget is known as the tax levy.

Tax Procedures

Another thing to think about when considering why property taxes differ by state, is that each government comes with its own procedures for property tax. Property taxes can vary widely from one state to the next, as the market value of properties within that state could be far different. For example, the real estate prices of buying a home in one state could be completely different to the prices of buying a home in another. With that in mind, property taxes would not match.

The fundamental concept behind property tax is to provide funding for public services. That means that real estate property tax can vary throughout the US in order to meet the needs of different local governments. Usually, property tax regarding real estate can change somewhat more regularly than other forms of tax, because the current performance of an area in terms of market can vary from one month to the next. If you're unsure about the taxes in your state regarding property, then you may benefit from learning more about what could impact them.