by Jon Styf
The property taxes that fund local city governments have a wide range in Tennessee, especially when it comes to the differences between how property is taxed in Memphis and Nashville, according to a report from the Lincoln Institute on Land Policy on data from 2021.
Nashville, for instance, has a lower effective homestead property tax rate than most other large cities (0.814% compared to the national average) while Memphis homestead properties are taxed at 1.523% above the national average. Nashville was 43rd in effective rate amongst the list of 74 large cities where data was available while Memphis was the 16th highest.
“The two most important reasons why tax rates vary across cities are the extent to which cities rely on the property tax as opposed to other revenue sources, and the level of property values in each jurisdiction,” the report said. “Two additional factors that help explain variation in tax rates are the level of local government spending and whether cities tax homesteads at lower rates than other types of property.”
The report also looked at commercial and industrial property taxes along with apartment property taxes, preferential treatment of homestead properties and property tax assessment limits.
Memphis again was far higher in tax rate for $1 million-valued industrial properties at 2.132% above the national average ranking ninth-highest while Nashville was 1.139% above the average, ranking 32nd.
Memphis was fifth-highest in effective apartment tax rate (2.408% above average) while Nashville was 26th at 1.286% above the average for apartment buildings worth $600,000 or more.
“The large differences between the two largest cities in Tennessee, and to a lesser degree Florida, show that caution is needed when extrapolating findings for a single city to an entire state,” the report said. “Readers wishing to determine whether taxes in a state are high, low, or somewhere in between are best served by comparing the rankings for urban and rural municipalities.”
In an overall comparison between the two cities, the report showed that Nashville ranked higher at 17th compared to Memphis’ 24th in local government spending while Nashville ranked 26th ($346,700) and Memphis was 71st ($142,800) in median home value.
Memphis was just above Nashville at 38th compared to 42nd in property tax reliance.
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Jon Styf is a contributor to The Center Square.
