Leave It As You Found It: Professional Showing Courtesy in Rim Country
By Dennis R. Riccio
President, Central Arizona Association of REALTORS®
Property taxes are once again a common topic of conversation across Payson and the Rim Country. Many homeowners have seen assessment notices increase over the past few years, and buyers are understandably asking how Arizona property taxes compare to other states and what protections exist against sudden spikes. Many homeowners are surprised to learn that even as assessments rise, Arizona remains one of the lowest property tax states in the country.
The reason is not accidental. Arizona’s relatively low property tax burden is the result of deliberate policy choices, including a voter-approved constitutional protection known as Proposition 117.
Understanding how this system works is essential for homeowners, buyers, and REALTORS® alike.
Arizona Remains a Low Property Tax State
Arizona ranks 48th out of 50 states for effective property tax rates on owner-occupied housing.
Source: U.S. Census Bureau, American Community Survey; Tax Foundation calculations. Effective property tax rates reflect taxes paid on owner-occupied housing as a percentage of home value.
Nationally, Arizona continues to rank near the bottom for effective property tax rates on owner-occupied housing. Even as home values have appreciated significantly, especially since 2020, Arizona homeowners pay a smaller percentage of their home’s value in property taxes than residents in most other states.
This matters in Rim Country communities like Payson, Pine, Strawberry, and Star Valley, where affordability, fixed incomes, and predictability are key concerns. Rising values do not automatically mean Arizona has become a high-tax state.
Arizona by the Numbers
When comparing property taxes nationally, Arizona stands out. Based on effective property tax rates paid as a percentage of home value. This low national ranking places Arizona among the lowest property tax states in the country (48 out of 50).
The accompanying chart illustrates this clearly. While many states exceed one percent in effective property tax rates, Arizona sits near the bottom nationally, reflecting its comparatively low overall tax burden on owner-occupied housing.
This low national ranking often surprises homeowners, particularly when assessment notices increase. The explanation lies not in unusually high tax rates, but in strong home value appreciation combined with a system that spreads those increases over time.
Within Arizona, county-level comparisons tell a similar story. Gila County’s effective property tax rate falls near the middle of Arizona counties. While some rural counties post higher effective rates, their overall tax bills remain lower due to significantly lower home values, while more urban counties tend to show lower rates applied to much higher values.
These differences highlight why raw percentages alone do not tell the full story.
Why Gila County Feels the Increase Anyway
Gila County home values are still well below those in Maricopa, Pima, or Coconino counties. However, even moderate increases can feel significant when household budgets are tighter and incomes do not rise at the same pace as home prices.
That disconnect often creates the impression that property taxes are increasing dramatically. In reality, much of what homeowners are experiencing is the result of market appreciation catching up over time, not a sudden change in Arizona tax policy.
Arizona’s low national ranking is not accidental.
How Arizona Reached a Low Property Tax Ranking
2012 | 2015 | Today |
Voter-approved Proposition 117 limits annual growth in a home’s taxable value to 5 percent, even when market values rise more quickly. This cap helps explain why Arizona remains competitive nationally and why property tax increases in places like Payson and the Rim Country tend to be gradual rather than sudden.
Without Proposition 117, Arizona’s ranking, and homeowner experience, would look very different during strong market cycles.
The Quiet Guardrail: Proposition 117
One of the most important and least understood protections for Arizona homeowners is Proposition 117, approved by voters in 2012 and in effect since tax year 2015.
Proposition 117 limits how fast the taxable value of a home can increase. Specifically, it caps annual growth in a property’s Limited Property Value at 5 percent, regardless of how much the market value increases.
This matters because property taxes are calculated using the limited value, not the full market value.
How Proposition 117 Works · Caps annual growth in taxable value at 5 percent · Applies to limited property value, not market value · Helps prevent sudden tax spikes during rapid appreciation
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Without Proposition 117, homeowners in rapidly appreciating markets would experience far sharper and more volatile tax increases. With it, increases are gradual, predictable, and easier for households to plan around.
In communities like Payson and throughout the Rim Country, this cap plays a major role in preventing long-time residents from being priced out of their homes simply because surrounding markets have heated up.
What Proposition 117 Does and Does Not Do
Proposition 117 does not freeze property taxes, and it does not prevent all increases. Taxes can still rise due to voter-approved bonds, overrides, or changes in local tax rates. New construction and major improvements can also affect taxable value.
What Proposition 117 does is prevent sudden spikes driven solely by market swings. It smooths appreciation over time and brings stability to the system.
That stability benefits homeowners, buyers, local governments, and the real estate market as a whole.
Why This Matters for Buyers and Sellers Today
For buyers, Arizona’s property tax structure remains a competitive advantage compared to many other states. For sellers, especially long-term homeowners, Proposition 117 has helped maintain affordability and predictability even through strong appreciation cycles.
As housing conversations continue across our communities, CAAR remains committed to providing clear, accurate information that helps homeowners, buyers, and REALTORS® make informed decisions and look past headlines to understand how Arizona’s property tax system actually works.
REALTOR® Client Talking Points Property Taxes and Proposition 117 What value is taxed? What does Proposition 117 do? Does it stop tax increases entirely? Why does this matter to homeowners? Why is Arizona still considered low tax?
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