As regular readers of our Commercial Property Tax blog undoubtedly recall a recent post about the “50-State Property Tax Comparison Study” issued by the Minnesota Center for Fiscal Excellence and Lincoln Institute of Land Policy. The study is a deep dive into both residential and commercial property taxes in large cities and rural areas across the U.S.
The authors examined the effective tax rates on commercial properties in a group of 53 cities: the largest city in each of the 50 states, with three additional cities: Aurora, Illinois, Buffalo, New York and Washington, DC.
Average tax bill
The study states that in that group of 53, the average effective tax rate on commercial properties is 1.921 percent. They calculate the tax bill on a $1 million property (plus $200,000 in fixtures) would come to $23,052.
The tax bill on that same commercial property in Minneapolis would set the owner back slightly more than an additional $10,000. The city’s commercial property tax rate is 10th highest among the 53 analyzed, at 2.77 percent. So the tax on that property would come to $33,240.
Compare that to the tax bill in Detroit (the city with the highest commercial property tax rate in the study): $45,240. The Motor City’s tax rate is 3.77 percent – more than five times higher than Cheyenne, Wyoming’s .069 percent. The tax bill in Cheyenne on that property: $8,280.
As you might recall, Minneapolis has the 7th highest tax rate (2.919 percent) on commercial properties valued at $25 million (20 percent added to the value in fixtures). The tax bill on the big-ticket property is then $875,604.
The tax on an identical building in Cheyenne would be $205,770.
Of course, the owners of the Cheyenne and Minneapolis commercial properties would both be wise to explore available options for reductions in their tax bills.