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Low- and Moderate-Income Property Tax Relief

April 29, 2013 Common Cents

It’s not always obvious how regressive New Hampshire’s property taxes are since the tax rises with the value of a given home. The reality is that property taxes take a far larger share of the income of low- and moderate-income homeowners than they do wealthier homeowners.

To address this problem, the state enacted in 2001 a little-known program called the Low- and Moderate-Income Homeowners Property Tax Relief Program –  and will begin accepting applications for this year on May 1.

Anyone interested in applying – or who would like to help a friend, family member, or client apply –  can obtain the necessary forms from the Department of Revenue Administration.

As this research shows, the poorest fifth of New Hampshire taxpayers paid an effective property tax rate of 5.4 percent in 2010, while the wealthiest one percent paid just 1.3 percent. This property tax relief program is one way to help balance the scales a little – except that very few people know about it.

Under the program, individuals with incomes of less than $20,000 and married couples with incomes below $40,000 who own a home in New Hampshire can receive a rebate of some of the state education property tax they pay.  The precise amount of the rebate varies depending on one’s income and on one’s city or town of residence, but, in recent years, the average rebate paid has ranged between $170 and $200.

LMIPTR Reaching Fewer People Over Time graphicUnfortunately, as the graph here suggests, the program has become less meaningful in recent years.  In 2011, the program reached just over 11,600 homeowners.  Contrast that with 2002, when more than twice as many — some 23,700 homeowners — benefited.

Policymakers interested in doing more to help low-income homeowners have an array of options available to them. For instance, helping DRA improve public awareness, increasing the income eligibility thresholds to compensate for inflation, or make renters – who do pay property taxes, just indirectly – eligible for the program.

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