Property tax is imposed on the assessed value of real property within a state. Typically, property tax is imposed at an annual rate of 0.28% to 2.49% of the assessed value of the taxpayer’s property.

As with other types of taxation, traditionally the real property of faith-based organizations and other charitable and humanitarian entities has been considered outside the category of subjects of government property taxation.  This exemption goes back to ancient times, with property tax exemptions for churches recorded in Sumeria, Babylon, Egypt, Persia, and Israel.  Why are churches and charities generally exempt from property tax? Different civilizations have answered that question differently. Under the United States Constitution, property tax on churches specifically could pose complicated First Amendment concerns, as a church that cannot afford its taxes would lose its house of worship.  Similarly, as described in the adage “the power to tax includes the power to destroy,” allowing the state to tax houses of worship would give the state the power to control or even destroy the exercise of religion.  The Supreme Court in Walz warned of the Establishment Clause minefield that would await any government attempt to tax the value of church properties or execute a tax foreclosure on a church.

For nonprofit organizations that have received donations of real property, such as houses of worship or office space, property taxes can present a substantial, even unsustainable, financial burden. The money spent on such annual property tax payments could otherwise be applied to the organization’s mission and programming. Organizations that expect to have extensive campuses must at least consider the scope and availability of state property tax exemptions in evaluating options for the organizations’ headquarters and operating sites.

Below is a tier ranking of each state for this factor. Click on the state's name to open up its page, which provides more information on that particular state's overall score and relevant laws.