Property taxes represent a major source of revenue for states and localities. In fiscal year 2015, the latest year of data available, 31.1 percent of total U.S. state and local tax collections came from property taxes, more than any other source of tax revenue. In the same year, 25 states and the District of Columbia raised the greatest share of their tax revenue from property taxes (see Facts and Figures Table 8).
A variety of local political subdivisions have authority to set property tax rates, including counties, cities, school boards, fire departments, and utility commissions. While most tax jurisdictions levy property taxes based on the fair market value of a property, some base the property tax rate on income potential or other factors. In addition, some states place limits on the extent to which property tax rates may increase per year or impose rate adjustments to achieve uniformity throughout the state.