If you are thinking about a move to Little Rock, AR, calculating the cost of living will be important to you. However, you can’t get a complete read on the cost of living without examining the city’s tax structure and policies. In Little Rock, property taxes are calculated based on the state, city, county, and school district levels. All of these political subdivisions are authorized to impose “ad valorem” taxes—taxes that are levied in proportion to the estimated value of the concerned goods or transaction—on both real and personal property.
The calculation and collection of Little Rock’s real and personal property taxes are the responsibility of local county assessors and collectors. Personal property taxes in Little Rock include automobiles, trucks, boats, motorcycles, and recreational vehicles. They are not imposed on furniture or household possessions.
Personal property taxes are collected annually in Arkansas; they are assessed on or before May 31 and are due by October 10. In Little Rock, the revenue from personal property taxes directly supports local government agencies, public schools, and libraries. More specifically, the breakdown of revenue distribution of property taxes is:
- 66.19 percent goes to public schools
- 14.12 percent goes to the city
- 7.13 percent goes to county services—Jail and Government
- 4.71 percent goes to the library system
- 4.14 percent goes to road maintenance
- 2.86 percent goes to fire and police pensions
- 0.85 percent goes to the Children’s Hospital
Property taxes are assessed at 20 percent of “true market value” for real property (real estate) or the usual selling price of personal property. The amount due is calculated as the assessed value times the local millage rate. Business property is assessed at the same rate as residential.
How Does Little Rock’s Property Tax Compare to Major Cities?
New residents are often surprised by the annual personal property taxes levied in Arkansas. However, when you compare the property tax rate to other major cities, Little Rock falls on the low end of the average scale.
Residential property taxes in Little Rock, Arkansas are calculated by multiplying the “taxable value” (or 20 percent of the appraised value determined by the assessor) by the millage rate. A mill represents a tenth of a cent. Little Rock’s millage rate is 70.10 mills with a tax rate of 1.40 percent.
If we calculate the rate per $1,000 of home value, Little Rock’s property tax rate comes to approximately $10.85. So, if you bought a home assessed at $250,000 the property tax would be $10.85 x ($250,000/$1,000), or $2,712.50. When calculated in this way, the national average property tax rate is $13.28.
In nearby Chicago, Illinois the property tax rate is about $15.89 – making the annual property tax owed $3,972.5. That’s a 46 percent increase! However, personal property is not taxed in Illinois—only real property.
Houston, Texas has an even higher property tax rate of $20.63, which is a 90 percent increase over Little Rock propety tax rates. However, it is important to note that Texas does not levy an individual wage income tax, which balances the cost of living a little. Texas also has no state property tax; they are considered local taxes and are levied by city and county.
In Los Angeles, California the property tax rate is about $8.38, or about 27 percent lower than Little Rock’s rate. Additionally, personal property taxes are only levied on businesses in Los Angeles. However, if you compare the median list price of a home in Los Angeles ($439,900) to the median list price of a home in Little Rock ($169,000), you’ll find that the lower tax rate still comes out to a higher annual cost.
Phoenix, Arizona has a property tax rate of $8.13, or about $2032.50 for a $250,000 home. That’s about a 33 percent decrease over Little Rock’s rates. Arizona property taxes are levied based on the assessed value of your home, as opposed to the current market value, which is why the rate is lower than average. The dependence on an assessed value also means that your property taxes can vary greatly from year to year. If your neighborhood’s property value starts to creep up, so will your annual property taxes.
Little Rock’s residential property taxes are also based on assessed value, but there is a $350 tax credit on your principal place of residence. To qualify for the tax credit, you must be an owner, recorded purchaser, or holder of the estate.
Additionally, to ensure that there isn’t violent fluctuation in your annual property taxes owed, Little Rock guarantees that the assessed value of your homestead will not increase more than five percent above the previous year’s taxable assessed value. An exemption worth noting is if you make an addition to your home or other substantial improvements – these value added by these can be taxed at higher than five percent of the previous year’s value.
Personal and real property tax rates are important considerations to take into account when deciding whether or not to make a move to a new city. Little Rock has a below average property tax rate, even when taking its personal property taxes into consideration. Little Rock also has a lower than average cost of living than almost any capital city in the nation. When you combine the lower than average cost per living, property tax rate, and median listing price available in Little Rock, it becomes a very affordable and attractive place to live.
For more information about living in Little Rock, AR contact a Movoto real estate agent who is experienced in the area.
2 Point Highlight
Little Rock has a below average property tax rate, even when taking its personal property taxes into consideration. In Little Rock, property taxes are calculated based on the state, city, county, and school district levels.
