By Adam Pagnucco.
If you have been looking at your property tax bill over the last few years and have noticed substantial increases, you’re right. (And if you would like to check it, you can do that here.) In fact, county and state data show that MoCo residents’ net property tax bills increased by more than 50% faster than local price inflation between 2021 and 2024.
That’s a big statement, and it requires detailed methodology to back it up. Estimating net property tax bills without direct access to the county finance department’s residential accounts is tricky business. Here are the building blocks for this analysis and their locations in state and county data.
Residential assessed value
This is the volume to which property taxes apply and can be found in the county’s Annual Comprehensive Financial Reports. In Maryland, residential property is defined to include single-family homes, condos and townhouses for assessment purposes. It does not include apartment buildings, which are classified as commercial property. This analysis is restricted to residential tax bills.
Total county direct tax rate
MoCo has many property taxes. (Surprise!) The Annual Comprehensive Financial Reports aggregate those that apply to the entire county, or close to it, into one direct rate. In FY24 and FY25, that rate was $1.024 per hundred dollars of assessed value. (Note: these reports offer a slightly lower calculation of the rate than the county’s budget, meaning that the numbers in this post are probably conservative.)
Number of residential properties
The number of properties is tracked by the state’s AIMs reports, which are available online back through 2011. Dividing assessed value by number of properties is necessary for controlling for the effect of new construction on revenues. (In MoCo, the number of residential accounts grew by 7% between 2011 and 2024.)
Property tax credits
MoCo has many property tax credits, so figuring out aggregate residential tax bills is not as simple as applying the rate to the base. By far the biggest of them is the Income Tax Offset Credit (ITOC), which provides a $692 flat tax credit to owner-occupied residential properties. This analysis deducts ITOC credits from gross taxes along with three much smaller credits: the Supplemental Homeowner’s Property Tax Credit, the Homestead Property Tax Credit and the Property Tax Credit for Individuals 65 and above and Retired Military Service Members. There are many others but these are the largest ones for residential properties. Their historical amounts can be found in the county’s annual Tax Expenditure Reports and are discussed in more detail in a recent report by the county’s Office of Legislative Oversight.
So here’s the formula for calculating change in residential tax bills: apply the direct tax rate to residential assessed value, subtract the tax credits and divide by the number of properties. It’s a bit primitive and I’m sure the county’s finance department has higher quality data, but this gives us a basic picture of what’s happening to our bills over time. Note that this analysis does not include fees like solid waste and water quality protection charges, both of which have increased over the years.
Now let’s look at a few charts to see the patterns of tax levies. Let’s start with the total direct property tax rate, which adds together the major tax rates covering most or all of the county.
Rising tax rates are one reason for rising tax bills. MoCo used to have a property tax limit tying the volume of collections to inflation, which occasionally necessitated lowering the rate to stay within the limit. Voters repealed that version of the limit in 2020, thereby removing a brake on collections growth.
Let’s examine assessed value per residential property. Single family homes, condos and townhouses are included but apartments (which are classified as commercial property by the state) are not.
Assessments fell during the Great Recession, one of the few good things from that dreadful period. However, for residential properties, they have risen every year since 2015, another contributor to rising tax bills.
The chart below shows net taxes per property from 2011 through 2024. This is gross property taxes minus the property tax credits discussed above divided by the number of properties. The series terminates in 2024 because that’s the most recent year that tax credit data are available at this writing.
In many years, this value was rather stable. That’s partly due to the old property tax limit which, prior to 2020, restricted property tax collection growth to the rate of inflation unless the county council chose to override it. But there are three other factors too.
- An 8.7% property tax hike in FY17 that helped persuade voters to pass term limits for the country executive and council.
- Rising assessments from 2023 on that doubled – or more – the annual rate of assessment growth in prior years.
- The council’s vote to raise property taxes by 4.7% in FY24. That rate increase along with growing assessments caused a 10.7% increase in net taxes per residence in one year. That’s the biggest increase since the Great Recession. For the sake of comparison, the Washington-Arlington-Alexandria CPI-I grew by 3.2% that year.
Let’s take a broader view. From 2011 through 2021, net taxes per residential property grew by an average annual rate of 1.8%, which was not that different from average annual price inflation of 1.6%. In the three years following, net taxes per residential property rose by 6.6% per year while inflation grew by an annual average of 4.3%.
That means residential property tax bills have been growing at more than 50% faster than price inflation.
One note. After I drafted this post but before I published it, the county council’s staff looked at changes in property tax bills from FY22-26. Duiring that period, they found that residential tax bills grew by annual averages ranging from 6.4% to 9.9%, with lower value properties seeing larger bill increaeses. The staff commented, “The average annual increase for all properties far exceeded the average annual inflation rate of 3.8% for those same years.” And so it appears that property tax bill growth has accelerated.
And now County Executive Marc Elrich wants to add another 6.3 cents to the tax rate, meaning that tax bills will rise even more if the council goes along with him.
We’re about to find out how serious our leaders are about affordability. They all say that word. Do they mean it?