Property Taxes Soaring Higher and Higher

Property taxes levied in Nebraska keep soaring higher. According to the Nebraska Department of Revenue property taxes levied in 2022 exceeded $5 billion for the first time, an increase of nearly $293 million, or 6 percent, over 2021 taxes. For agriculture, taxes levied on agricultural land totaled $1.17 billion, up 2 percent. Higher, but below the record of $1.20 billion levied in 2017. Taxes on farm buildings and farm sites increased 10 percent to $60 million and taxes on agricultural machinery and equipment rose 16 percent, totaling $53.5 million. The figures do not account for the tax credit programs provided by the state to reduce property taxes which equaled over $900 million to offset 2022 taxes.

Taxes levied by schools, 59 percent of taxes levied, increased $168 million over 2021, $47 million of which was due to increased bond taxes. Taxes levied by counties were $40 million higher and city taxes grew $32 million. Among property sectors, residential property owners experienced the largest increase of $197 million, followed by commercial and agricultural landowners of $52 million and $21 million, respectively. Residential, agricultural land, and commercial real property account for 92 percent of property taxes levied.

Cumulative tax growth over the past 15 years on agricultural land, residential, commercial real property, and total taxes levied is illustrated in Figure 3. Notable differences can be seen in tax growth among the sectors. Taxes levied on agricultural land were 125 percent higher in 2022 than those levied in 2008, while taxes on residential were 74 percent higher, taxes on  commercial property were 75 percent higher, and total taxes were 84 percent greater. This reflects the shift in taxes which has occurred since 2008 onto agricultural land from other property sectors. Much of the growth in taxes on agricultural land occurred prior to 2016 when assessed values grew rapidly, but it tapered off after 2016. In contrast, taxes levied on other property sectors grew steadily over the period.

Figure 3. Percentage Growth in Property Taxes by Sector, Relative to 2008

Source: Nebraska Department of Revenue

The cumulative growth in taxes levied by schools, counties, community colleges, and total taxes is illustrated in Figure 4. Combined these subdivisions account for 81 percent of taxes levied. School taxes, including bond taxes, and taxes levied by counties, exceeded those levied in 2008 by 83 percent, roughly the same growth seen in total taxes which exceeded 2008 levels by 84 percent. Taxes levied by community colleges grew the most, exceeding 2008 levels by 142 percent. However, community colleges make up only a small slice of the overall property tax pie, accounting for 5 percent of total taxes collected. The rapid growth over the past 15 years probably reflects additional vocational training programs being offered to meet local business needs and the influx of students turning to community colleges to launch their post-high school education. It’s likely the tax increase had some part in legislation introduced this year in the Unicameral to remove community colleges from the property tax rolls. The Revenue Committee held a hearing on the measure last week.

Figure 4. Percentage Growth in Property Taxes, by Subdivision, Relative to 2008

Source: Nebraska Department of Revenue