IPTI | Property Tax in the News – December 2025

IPTI’s usual monthly newsletter – the “President’s Message” – contains, inter alia, some summarised news articles from around the world. This IPTI publication – “Property Tax in the News” – contains some of the more interesting news articles concerning property taxes in North America and Europe which is where many of our members have a particular interest. Links to these and more, similarly summarised, articles – from North America, Europe and around the globe – can be found in “IPTI Xtracts” on our website: www.ipti.org. Please note that these are news articles; they do not necessarily reflect IPTI’s views.

USA

USA: When Property Taxes Are Unstable, Value Becomes Volatile

The recalibration of property tax policy in Boston has again highlighted the fragility of municipal revenue systems built on commercial real estate valuations. Under proposals by Mayor Michelle Wu, the city is moving to raise residential property taxes by roughly 13 percent starting in January, largely driven by a steep decline in the value of commercial buildings as the office market slumps. That increase equates to about $780 annually for the average homeowner. Meanwhile, commercial owners may see minor decreases, on average saving roughly $210, though rates depend on location and property type.

That shift is more than a local oddity, it reflects a broader national pattern. States and municipalities are rethinking how they assess and levy property taxes in reaction to changing property values, budget pressures, and shifting economic conditions. Take Vermont: as of December 2025, the state projects a nearly 12 percent increase in property tax bills next year, driven by rising education costs and school spending, even as enrollment declines. That’s on top of a nearly 41 percent increase over the past five years. Meanwhile, in Ohio, lawmakers are debating a suite of property-tax reforms aimed at reshaping valuations and limiting future tax hikes by giving county auditors more control over home valuations and capping “inside millage” increases (the kind that are raised without a public vote). The goal is to slow or stabilize tax burdens on homeowners.

Even more dramatically, some states like Florida are flirting with deeply rethinking, or entirely eliminating, traditional property tax regimes. The idea of abolishing property taxes in states like Florida has gained discussion in policy circles and among some lawmakers, though details on how such a transition would work remain murky and politically fraught. Reports suggest the proposal could go before voters, but questions about how to replace lost revenue for schools, infrastructure, and public safety remain unanswered.

These shifts carry serious implications and require a recalibration of how risk, return, and long-term value are assessed. In markets like Boston, rising residential-tax burdens may suppress demand for owner-occupied housing. In states like Vermont, higher tax bills could dampen buyer appetite, especially among retirees or middle-income households, potentially cooling certain housing submarkets. In Ohio, reform efforts could mitigate future volatility but uncertainty over valuation standards or local millage hikes adds a layer of unpredictability. And in states entertaining full property-tax repeal or radical restructuring, investors must weigh the benefits of lower holding costs against the risk of service-level cuts, regulatory upheaval, or new types of taxes (income, sales, user fees) replacing the lost property-tax base.

What’s becoming clear is that the old assumption of stable, flat, or slowly rising property taxes as a background constant for valuation may no longer hold. Instead, tax policy itself is emerging as a material macro factor—one that can swing values, influence occupancy or ownership decisions, and suddenly reshape market dynamics. For anyone investing or operating real estate today, paying attention not just to vacancy rates or cap rates but also to legislative sessions, budget votes, and state revenue pressures may be critical to successfully forecasting returns.

 

New York: Pandemic Changes Still Haunt New York City Property Tax Assessment Process

COVID-19 and the government-ordered shutdown had immediate negative consequences for all types of real estate, and New York City’s tax valuations took this into account. Damage from the pandemic still weighs down property values today, compounded by cultural shifts that sapped demand for commercial properties.

Fair market values have evolved to reflect pervasive vacancy, building obsolescence and the heightened cost of serving tenants that have abundant alternatives to choose from. At the same time, work-from home practices reduce space requirements. Retailers, restaurants and hotels see half the foot traffic they once had from nearby office buildings, adding to ongoing pressure from e-commerce and other challenges to create excess vacancy, constrained rental streams and declining market values.

Valuation for property taxation has not evolved, however, judging by the revaluation tax assessments the city’s Department of Finance is issuing.

Revaluations ostensibly update taxable property values to current fair market value. Yet New York’s assessors habitually inflate valuations by applying pre-pandemic rental rates and vacancy assumptions, ignoring the rents landlords are actually collecting today and turning a blind eye to fundamental changes in demand for commercial space. Old thinking persists among these assessors, and it haunts revaluation tax assessments.

The commercial real estate sector will never fully return to the way things were before COVID-19.

Here is why:
Many shuttered service businesses and stores — dry cleaners, shoeshine stands, shoe stores, department stores — are unlikely to return because changing consumer preferences slashed demand for their services. Dressing up for work is history; offices are downsizing, and remote work is the new protocol.

Kastle Systems, which monitors office occupancy as people on site, shows average office attendance in New York City is a little more than 50 percent of the baseline occupancy level set before the pandemic. Foot traffic from office workers is half what it was six years ago, and ancillary businesses that thrived on that traffic have not returned.

Office, retail and hotel occupancy rates have recovered somewhat from record post-pandemic lows, but sustained vacancies, empty stores and retailer struggles persist. However, the Department of Finance is ignoring the limited extent of recovery. For example, assessors stubbornly value retail properties by ignoring vacancies and imputing market rents to stores that are still empty after three or four years.

To make matters worse, these market rent estimates rely on pre-pandemic rents, even though rents for many operators have plummeted. Properties that produced $350 per square foot are now asking $150 per square foot, and some stores rent below $100 per square foot. The assessor is clinging to the past, and valuations fail to reflect the reset in real market value.

Office usage has declined with downsizing and remote working. Three onsite days a week is a common standard and has reduced many employers’ space requirements. Some companies with long-term leases sublet all or part of their spaces, while others cancelled expansion plans and reduced their footprints. Subleases almost always involve discounted rent, so landlords competing with sublease offerings must reduce asking rent to compete for tenants. But the New York tax assessor gave no effect to these demonstrated reduced market rents.

Because the assessor continues to rely on the rates in master leases to capitalize income to market value, they prevent valuations from dropping to true market levels. A parallel problem occurs in retail, where sublease rates for major retailers are sometimes half or one-third of prime leasing. Now that some major employers have mandated a full-week return to the office, another phenomenon is occurring. In the refurbished Class A environment, landlords provide tenants with gyms, play areas, lounges and even dedicated lunch and breakfast environments to help lure employees to the workplace.

Landlords often provide these amenities outside of tenants’ leased spaces, reducing the property’s rentable square footage. Where amenities are within the tenants’ leased footprints, the additional square footage translates into lower density or more square feet per employee for that occupier, and the landlord has much higher occupancy costs.

Taken as a whole, reconfigurations that dedicate a lot of space to amenities incur substantial costs to landlords without a significant increase in market rent to justify the expense. Moreover, owners of Class B buildings that were not upgraded are finding that their properties are outdated and obsolete. For example, the market rents achievable along Manhattan’s Third Avenue corridor are too low to justify the cost of conversion and tenant improvements

The coup de grâce for property taxpayers is the difficult review and correction process they are required by law to follow to remedy assessment overvaluation and tax inequities.

During the pandemic, almost every city agency adopted a remote work schedule and most —notably the Tax Commission and Law Department — still maintain a work-from-home regimen. With city personnel in the office just three days each week, fewer people are examining assessment appeals, and the city is failing to grant review hearings to remediate those applications, as required by law.

In-person negotiation is long gone, and videoconferencing is the only option to review assessment appeals in New York City, making it nearly impossible to adequately review floor plans, photographs, spreadsheets and leases with city officials. Moreover, mandatory written submissions are replacing video hearings. Many city personnel have retired or vacated positions that remain unfilled, further straining the process.

Taxpayer teams must navigate this problematic post-pandemic framework, however, to contend with assessors who cling to historical market assumptions. By refusing to recognize reduced market rents and owners’ rising costs, assessors are keeping New York’s assessment values unrealistically high.

 

Illinois: Loop’s declining value fuels record 16.7% jump in median property tax bill for Chicago homeowners

A dramatic decline in the value of commercial property in Chicago’s Loop, the city’s longtime economic engine, fueled a record property tax increase on homes across the city, according to an analysis released today by Cook County Treasurer Maria Pappas.

The amount of taxes imposed on Loop commercial properties — office buildings, retail stores, hotels and restaurants — for tax year 2024, decreased by more than $129 million because of a significant drop in their values.

Property taxes are a zero-sum game. So, when one group of property owners pays a smaller share of an ever-increasing overall tax bill, others whose property values remain level or rise pay more.

For tax year 2024, Chicago homeowners will pay $469.4 million more than they did the year before, because of the tax shift from commercial to other properties and Chicago Public Schools and other local governments asking for half-a-billion dollars more than they did a year earlier.

The median residential tax bill in the city rose 16.7%, to $4,457 — the largest percentage city increase in at least 30 years. It also marks the third year in a row when a reassessed area of Cook County saw record median tax bill increases for homeowners, largely due to commercial values falling while residential values rose

For tax year 2023, billed in 2024, the median tax bill in the south and southwest suburbs rose 19.9% to $6,117, and for tax year 2022, billed in 2023, the median tax bill in the north and northwest suburbs rose by 17.7% to $7,008.

Particularly hard hit this year were homeowners in poorer, predominantly Black areas on the city’s South and West sides, where home values have soared since the COVID-19 pandemic. Median residential bills in nine community areas went up by more than 50%, with three topping 80%:

• In West Garfield Park, the median homeowner tax bill increased by nearly $2,000, or 133%.
• In North Lawndale, it increased by nearly $1,900, or 99%.
• In Englewood, the increase came to $609, or 82.5%.

“When the Loop gets a cold, the rest of the city gets pneumonia,” Pappas said. “Homeowners across the city are paying the price. I’m particularly concerned how lower-income homeowners in struggling communities are going to be able to pay their bills.”

That sticker shock, and how it came about, is documented by Pappas’ research team in its Tax Year 2024 Bill Analysis, an examination of nearly 1.8 million bills that were mailed to property owners Nov.14 and are due Dec. 15.

Owners of large apartment buildings and complexes, as well as owners of industrial facilities, were not spared from this year’s tax shift. Multifamily properties, those with six or more units, must pay an extra $100.5 million, while industrial property owners must pay $73.5 million more. That’s compared to commercial property owners across the city paying $134.4 million less in taxes.

Chicago was reassessed in 2024 for this year’s bills, which triggered the shift in tax burden from commercial properties onto others, as overall taxes in the city grew by $528.6 million, or 6.3%. Less sticker shock likely will be felt in the city’s suburbs, which were reassessed in prior years.

In the suburbs north of North Avenue, which are now being reassessed for next year’s bills, taxes rose by a total of $209.4 million, or 3.7%. The increase in taxes on both businesses and homeowners rose by less than 4%. However, the median bill for businesses grew at a faster pace: 4.6% versus 3.4% for homes.

After being hit with a record 19.9% increase in their median residential tax bill last year, homeowners south of North Avenue will get something of a break, with a median increase of 2.2%. Businesses face a median increase of 3.1%.

Across Cook County, taxes rose by almost $871.8 million to nearly $19.2 billion, or 4.8%, well above the 3.5% inflation rate for 2024.

This is at least the 30th consecutive year that property taxes rose across the county — the result of schools and local governments like municipalities, the county, sanitary districts, library districts, park districts and fire districts — asking for more money from property owners.

Also adding to property owners’ financial burdens were increases in Tax Increment Financing district taxes and those imposed under the state’s recapture law. The law allows school districts and some local governments to increase their levies by the amount refunded to taxpayers in the previous year as the result of bill adjustments.

The yearly tax bill analysis is the latest addition to the Pappas Studies, a series of examinations of the complex property tax system available at cookcountytreasurer.com. Property owners who don’t want to wait for their bills to arrive in the mail can pay their taxes online now at cookcountytreasurer.com. Partial payments are accepted.

 

Minnesota: Property taxes statewide may go up close to $1B next year

Property taxes across Minnesota could increase by a total of up to $1 billion next year under approved levy increases from counties, cities and school boards and other taxing districts adopted in 2025. The increases, payable in 2026 and reported by the state Department of Revenue this week, continue a trend in the 2020s as inflation continues to drive up operational costs, according to groups representing local governments.

Statewide, levies could reach up to $14.6 billion next year, an increase of 6.9% from 2025. The final number is typically lower than the maximum set in preliminary numbers and is used as a starting point for governments as they set final levies.

Final property taxes are set by the end of the year, after local governments calculate estimates for individual parcels and send property owners truth-in-taxation notices sometime in November.

Taxing authorities must hold public input meetings before they set final levies on Dec. 29. To find out about truth-in-taxation hearings in your county, check their website. Minnesota property taxes totaled around $13.7 billion in 2025. In 2020, around $10.9 billion was collected statewide, according to data from the Department of Revenue.

Changes at the federal level under the administration of President Donald Trump add another potential cost driver with new eligibility requirements for assistance programs like Medicaid, according to the Association of Minnesota Counties.

“Nuts and bolts” costs like staffing, employee benefits, capital costs and even gas prices are all up, said Matt Hilgart, a lobbyist with the group. But unpredictability and new rules from higher levels of government mean new staffing needs and expenses for counties.

“New mandates coupled with reductions in reimbursements to local governments — particularly counties — are creating this situation where we’re levying now to either hire people to fulfill a mandate that we’ve been told to do by the state or federal government,” he said. “It feels like we’re handcuffed.

As Trump and a Republican-controlled Congress passed the tax package dubbed the “big beautiful bill” this summer, counties were concerned that they could face financial strain from new administrative requirements on Medicaid and SNAP — the Supplemental Nutrition Assistance Program. Supporters of the bill touted its tax breaks for individuals.

School districts are concerned about uncertainty with federal funding, according to Kirk Schneidawind, executive director of the Minnesota School Boards Association, though inflation and a growing reliance on local levies for funding play a more significant role.

“Increases from the state have not kept up with inflation,” he said. “To continue programs and opportunities … we’ve got to find ways to generate revenue.”

Minnesota’s 2023 education bill included funding increases of up to 3% to address inflation, but two years is not enough time to fix a long-term problem, Schneidawind explained.

St. Paul Public Schools was one of many districts where voters approved a levy referendum in the Nov. 4 general election. Starting in 2026, the district’s general revenue will increase by $1,037 per pupil for 10 years. It’s expected to raise around $37.2 million for the district.

More information on preliminary property tax levies can be found on the revenue department’s website at revenue.state.mn.us/preliminary-property-tax-levies.

CANADA

Ontario: MPAC Sends Property Assessment Notices to Ontario Owners: Here’s What You Need to Know

Last week, the Municipal Property Assessment Corporation (MPAC) began issuing more than 618,000 Property Assessment Notices (PANs) to property owners throughout Ontario. These notices reflect updates resulting from changes such as the occupancy of a newly constructed property, ownership transfers, school support selection, additions, or changes in property use.

Each notice outlines the reason why a property’s assessment has changed. Those changes could be due to change in your assessment, ownership updates, or other factors. More information is available at mpac.ca/notice.

“MPAC is dedicated to empowering Ontario Property owners with transparent, reliable information about their assessments,” says Carmelo Lipsi, MPAC’s Vice-President of Valuation & Assessment Operations and Chief Operating Officer.

“Whether you’ve renovated your home, changed ownership details, or updated your school support, your Property Assessment Notice reflects those changes. We encourage property owners to explore MPAC AboutMyProperty™ to better understand their assessment and reach out with any questions.”

All Ontario property owners have access to MPAC AboutMyProperty™, an easy-to-use tool for comparing their property to others in their neighbourhood, understanding how an assessment was determined, and filing a Request for Reconsideration if they disagree with their property assessment. The deadline to file a Request for Reconsideration for the 2026 property tax year is March 31, 2026.

Through MPAC AboutMyProperty™, property owners can also explore MPAC’s Property Pulse Dashboard — an interactive feature that provides a broader view of property trends and assessment insights across Ontario.

The types of changes that would prompt a Property Assessment Notice can include:

• a new property
• an update to ownership, or a change in the school board support
• change in assessed value, which may be the result of an addition or other improvements to
a property
• change to the tax classification, which may be due to the change in use of a property
• change in tax liability
• update to mailing address, lot dimensions, legal description, property location
• update to occupancy, taxable tenant(s)

Property Assessment Notices going out this year continue to reflect the property’s assessed value as of January 1, 2016. Municipalities will use these assessments for the 2026 tax year.

The Canada Post service disruption may impact the delivery of the Property Assessment Notices. If you think you should be receiving a notice, we encourage you to log in to MPAC AboutMyProperty™ to view it easily.

Recent amendments to the Assessment Act now allow MPAC to send Property Assessment Notices electronically. While property owners currently have access to their notices through MPAC AboutMyProperty™, the option to receive these notices digitally will begin in 2026. We encourage property owners to visit mpac.ca to register for MPAC AboutMyProperty™

 

EUROPE

UK: Relief for retailers as business rate changes in budget not as bad as feared

Retailers have breathed a sigh of relief after changes to their business rates bills in the budget were not as bad as feared, after the industry had warned for months that more punitive measures could lead to shop closures and jobs losses.

The chancellor, Rachel Reeves, on Wednesday revealed plans to permanently reduce business rates for retail, hospitality and leisure properties – although the discounts are not as generous as those that have been in place since the pandemic. About 750,000 properties in those sectors will see their bills set below the current standard level, with deeper discounts for smaller operators, according to the government.

Businesses are still calculating what their ultimate bills will be, but the global tax firm Ryan calculated that there are 3,480 retail properties in England that have the higher rateable value and together would pay an extra £112m in business rates from April 2026. However, the government is providing billions of pounds of “transitional relief” to help those whose bills will increase dramatically next year.

Jitters over the government’s final decision had led the British Retail Consortium (BRC), which represents most big retailers, to warn in September that a large rise in bills could lead 400 big stores to close and put as many as 100,000 jobs at risk.

However, reacting to the budget on Wednesday, the chief executive of Sainsbury’s said “industry concerns have been heard”.

“We all want to see inflation and the cost of living come down,” said Simon Roberts. “We welcome the government’s decisions in the budget on business rates, and that industry concerns have been heard. We have been working tirelessly to manage rising costs, and today’s measures mean we can continue tackling inflation and providing great value, quality and service for our customers.”

Those in buildings with a rateable value of more than £500,000 will pay an additional surcharge,although the charge will only be about a quarter of the level originally feared. Many retailers and hospitality businesses will also see the charge offset by deflation in the value of many of their properties, as well as the use of a lower “multiplier” figure which is used to calculate business rates.

Analysts at Citi said they had predicted that the business rates changes could cost Sainsbury’s as much as £39m more, and Tesco £100m, but the chancellor’s announcement meant “that headwind is likely to be materially lower than we had expected”.

George Weston, the chief executive of Primark owner Associated British Foods, said: “The net impact of the business rates reforms to Primark is positive, but we are disappointed that larger, anchor stores that drive so much activity in high streets and local communities are not exempted from the higher rate for large properties.

“We recognise that the government is operating in a difficult environment. Looking ahead, however, we now need to see more action to raise real living standards, drive growth and to reduce the cost of doing business to encourage companies to invest in the UK.”

The BRC chief executive, Helen Dickinson, said it was a “mixed-bag budget” that offered relief for many shops, but brought in new costs for others.

“Retailers face a delicate balancing act as they strive to invest, hire, and keep prices affordable. The announced permanent reduction in retail business rates is an important step to reduce the industry’s burden from this broken tax. Yet the decision to include larger retail premises in the new surtax does little to support retail investment and job creation.”

But the business rates changes have stoked frustration beyond the retail industry.

Kate Nicholls, the chair of UKHospitality, which represents thousands of restaurants, pubs and cafes, said: “Wage rises, holiday taxes and monumental increases in [property values used to calculate rates] have put even further pressure on hospitality businesses as a result of this budget.”
Business lobby group the CBI said the budget overall signalled the government’s growth mission was stalled. Rain Newton-Smith, the CBI chief executive, said: “A scatter-gun approach to tax risks leaving the economy stuck in neutral.”

The City welcomed the chancellor’s decision to introduce a three-year stamp duty holiday on the purchase of shares in companies listing in the UK.

Dame Julia Hoggett, chief executive of London Stock Exchange, said the move was “a clear acknowledgment of the vital role equity markets play in driving investment, innovation and job creation. It is also an important first step in removing the distorting effects of this duty, which has historically disincentivised investment in UK companies, especially for retail investors.”

 

 

Compliments of the International Property Institute – a member of the EACCNY