You’ll find the city of Tacoma along the crystalline waters of Commencement Bay, the hilly streets lined with eclectic local shops, fine eateries, and green spaces around nearly ever corner. It’s no surprise that you have either bought a home there or are considering doing so. Before you get too far ahead, make sure you’re aware of what to expect for property taxes once you sign the mortgage.
What Do I Need to Know about the Tacoma Property Tax?
Property taxes in Washington state are regulated by the state constitution and divided into local districts in order to fund public services like public schools, the fire department, and parks and recreation. Property owners in Tacoma are subject to taxes from Pierce County, an area which includes cities like Tacoma, Gig Harbor, Puyallup, Lakewood, and more. These funds go to support local infrastructure, such as the Port of Tacoma and local parks, and services like the fire department.
In the state of Washington, the maximum property tax rate that can be applied before voter approved levies, known as regular taxes, is 1% or $10 for every $1,000 of a home’s value. Any special measures approved by the voters of the city can exceed this limit. The total amount of requested budget can only ever go up by 1% per year under most circumstances. Finally, the assessor’s office determines the budget that needs to be divided amongst all of the county’s properties. All of these factors weave together in a dance that yields the final severity of the property taxes for every lot in the jurisdiction.
The important numbers for homeowners to know are the tax levy rate and the assessed value of their home. Consider a theoretical example home that has an assessed value of $210,000 and a tax rate that comes to $15 per $1,000. Both numbers are unrealistically clean and slightly below the county average, although not by much. The homeowner would just have to multiply the value by the tax rate to find a starting bill of $3,150 for their annual property tax.
How Is the Property Tax Rate Expected to Change?
Much of the jumps seen from 2011 to 2014 in the property tax rates of Pierce County came as the result of the collapsing housing bubble. This drove the value of property in the city downward, eventually forcing changes in the applied levy rates in order to accommodate the city budget. The News Tribune reported a 7.7% increase from 2014 to 2015, and Tacoma voters have shown a willingness to take on higher taxes in order to improve the city that is the primary force behind the surge. 2016 promises more of the same with most property owners seeing a hike in their annual payment. Less than 7% of all homeowners received a reduction in their property taxes. The recovering housing market will stave off the major increases that the earlier portions of this decade brought to property owners, but the overall future trend will be upwards with the occasional dip in the years where the pace of growth in the assessed value compensates for the voter measures.
What Tax Relief Options Are Available in Tacoma?
While any property owner can apply for a review of their assessment value, there are a few commonly used deferrals, exemptions, and reductions that Tacoma residents can seek. Schedule a review if a portion of the property has suffered notable damage or has a current use that deviates from the one indicated on the assessment. Homeowners experiencing a reduction in income can apply for a deferral that must eventually be paid back. People with disabilities and senior citizens can access exemptions as long as they make less than the annual income limit, valued at $45,000 for 2015-2016. If you plan on adding value to your new home or taking on a project house that will see a jump in its assessed value, apply for the Three Year Home Improvement exemption that can reduce the taxed value of your home by up to 30%.
How Does the Tax Rate Compare to Other Areas?
In 2013, Washington newspapers noted that property taxes in Pierce County had the highest rates in the state. This can understandably incite feelings of panic in potential investors, but the hiked rates only seem elevated when taken by themselves. Because of its location along the Puget Sound in close proximity to Seattle, the Emerald City understandably serves as a common comparison, but there a few key differences that need to be kept in mind when looking at the side-by-side. King County, the governing body that assesses and collects the taxes for Seattle, is ranked just 15th in the state for the levied tax rate, but they have an unfair advantage with property values that more than double the Tacoma median. Because King County has to tax less on the higher values to reach their budget needs, they can afford to drop the tax rate down. The average Seattle homeowner still ends up paying around $1,000 more in property taxes every year.
Branching out to the rest of the country, you’ll see that even the slightly elevated rates in Pierce County fall significantly below those seen by urban homeowners in New England, with an effective tax rate over 2% on average, and the Midwest, which hovers around 2% as well. Those making their way from other parts of the nation will have a high likelihood of seeing their rates go down. The roughly 1.2% tax rate for Tacoma may seem high if you only look to the surrounding Seattle metropolitan area and the nearby rural areas, but it is almost a quarter less than the national average.
What Key Takeaways Should I Hold Onto?
Tacoma is full of a vibrant sense of community that translates into the consistent approval of voter initiatives to fund local services like the expansive Point Defiance Park or the many non-profit organizations in the city. Pierce County may consistently have sat at the top of the tax rates over the last few years, but the actual amounts paid by homeowners is less than those who live within Seattle or the suburbs that sit closer to it. The Washington state tax code is complex, but homeowners and buyers can skim down to the tax rate and assessed value to gain their footing or ask their Movoto agent for help.
2 Point Highlight
Although the property tax rates in Tacoma may look high when compared to Seattle’s King County, lower property values mean overall lower payments for similar properties.
Property taxes in Tacoma support a significant amount of larger non-profit organizations and public services than the typical budget.
