Oklahoma's property taxes are among the lowest in the nation. The property tax, the oldest form of taxation in this country, is a tax on wealth rather than on income or sales. The property tax comprises 17 percent of tax revenue in Oklahoma. This is less than in most other states. Only local governments use property taxes in Oklahoma. Property taxes in Oklahoma were stagnant in the 1980s but have increased steadily since 1992. Property tax revenue has grown eight percent per year since 1998 due to substantial new building and increasing value of existing properties.

The property tax has several advantages as a source of revenue:

• The tax is stable, with a generally reliable rate of growth in most economic conditions. This helps taxpayers know what they will pay and it helps governments keep their budgets steady;
• The tax is generally fair to all income levels, since higher income families usually have higher value homes. The fairness is improved in Oklahoma and other states that have programs to lower property tax costs to seniors and disabled taxpayers; and
• There is a close tie between who pays the tax and who benefits from it. Property values are higher where there are effective public services like education, safety, and transportation.

There are disadvantages to the property tax as well, including:

• It is generally the least popular tax among citizens;
• It requires a complex and costly administrative system to assess property values; and
• Properties of the same value may be taxed differently, either because state law and local practice treat some types of property differently or because assessment practices differ.

Property taxes have traditionally been the main source of revenue for local governments, though this has been less true in Oklahoma than other states. Property taxes are the main source of non-grant revenue for school districts, counties, and vo-tech systems. Cities may use property taxes only to pay the debt on bonds approved by voters. Under the Oklahoma Constitution, property tax rates are limited for each government and purpose and most rate increases require a vote of the people.

Property taxes are paid by most property owners, including homeowners, owners of rental property and businesses. While renters do not pay the tax directly, economists agree that rents typically include at least some of the landlord's cost of property taxes.

Property taxes are administered by county assessors and treasurers, who are elected officials. They must comply with state constitutional and legal provisions that attempt to keep taxes low and somewhat uniform among the 77 counties.

Setting the taxes is a two-step process.

1. The assessor determines an assessed value for each property. Assessments are adjusted each year based on sales of similar properties and each property is physically inspected every few years. Assessments for most properties cannot increase more than 5 percent per year.
2. The treasurer determines the tax rate on each dollar of assessed value; this rate is the total of taxes levied by all local governments that serve the property and are authorized to collect a property tax. The county treasurer bills all property owners annually and taxes are paid in one or two installments early each calendar year. The County distributes revenues to the local governments that levy the tax.

Read OKPolicy's Property Tax Fact Sheet

• Calculating Property Taxes

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