Property Tax Post: Pennsylvania Legislature Mulls Eliminating Residential Property Tax


Pennsylvania Gov. Tom Wolf announced plans to focus on reducing the property tax burden and to offset the loss of revenue for schools through statewide funding, from the natural gas production tax, personal income tax and sales tax. Pennsylvania joins several other states, like Kansas, Texas and Washington, that are looking to reform their property tax and school funding approaches.

It appears that Pennsylvania’s Senate Finance Committee is willing to take Gov. Wolf’s plan even further by considering a bill March 2 that would propose an amendment to the state’s constitution that would essentially eliminate property taxes for all residential properties. The bill (H.B. 147) already passed the House February 24. A similar bill (S.B. 76) narrowly made it through the committee during the 2014 legislative session, but ultimately failed. However, it may be more likely to pass this session.

The actual text of H.B. 147 looks like a minor change—just a few words—but the effect could be dramatic. Currently, owners of homestead property can receive property tax exemptions of up to 50 percent of the median assessed value of all homesteads within their local tax jurisdiction.

The bill would increase the limit to “100% of the assessed value of each homestead property.” In other words, a full exemption, even if the property’s value exceeds the county’s median value.

As an example, the median home value in Philadelphia County (coterminous with the city) from 2009-2013 was roughly $140,000. Let’s see how the proposed law change would affect three hypothetical property owners: one with a home valued below the median value, at $100,000; one with a home valued at the median value, $140,000; and one with a home valued above the median, at $200,000.

  • The $100,000 property would currently receive a $50,000 exemption, and would receive a full, $100,000 exemption under the law change. 
  • The $140,000 property would currently receive a $70,000 exemption, and would receive a full, $140,000 exemption under the law change.
  • The $200,000 property would currently receive a $70,000 exemption, and would receive a full, $200,000 exemption under the law change.

Therefore, while all owners would receive full exemptions under the proposed change, those with properties valued above the median home value seemingly benefit more. And the higher the value, the greater the benefit, because the $70,000 exemption would be the cap based on the median home value no matter how high a single property is valued.

Will owners of lower value homes even care about this distinction? Probably not if they stop getting their property tax bills in the mail.

Continue the conversation on Bloomberg BNA’s State Tax Group’s LinkedIn page: Is a full exemption of all residential property a prudent plan?

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