Arizona homeowners enjoy the third-lowest property tax burden per capita in the nation, according to a new brief published June 8, 2026, by Americans for Tax Reform. The report identifies Arizona as a model for residential property tax relief, crediting a three-layered system of restrictions that work together to keep local taxes unusually low. The combination has proven so effective that the organization is urging other states to copy Arizona's approach.
The state's property tax framework rests on three pillars. First, local governments can't increase property tax revenue beyond the rate of inflation plus population growth in their jurisdiction, allowing cities, counties, and school districts to account for higher costs and new residents but preventing them from spending beyond their means. Second, Arizona imposes a permanent 5% annual cap on assessed home values—called "Limited Property Valuation"—that applies from the time a home is built until it's demolished, with no reset when the property is sold. Third, a failsafe rate cap protects individual homeowners by preventing their total tax burden from rising above 1% of their home's limited taxable value, regardless of how many taxing jurisdictions apply.
The report emphasizes that strict spending caps are "crucial to reining in local taxes" and have proven to be "the backbone of Arizona's unparalleled success" in keeping property taxes low. According to the brief, Arizona "rightly keeps local governments' hands out of state coffers," contrasting this with states like Nebraska that subsidize out-of-control local spending and now suffer the third-highest per capita property tax burden in the nation. The authors note that municipalities convinced they need to raise taxes can place a question before voters, though Americans for Tax Reform recommends a supermajority threshold of two-thirds or 60% to prevent frequent overrides for "pet projects and progressive boondoggles."
Arizona's permanent assessment cap solves a problem inherent in California's Proposition 13, which protects homeowners from assessment increases beyond 2% annually but resets values to market rates when properties change hands. This reset creates economic distortions and behavioral shifts as homeowners avoid moving to preserve their tax advantage. Arizona's approach eliminates most of these problems by maintaining the 5% cap continuously, regardless of ownership changes. The report explains that local property taxes are "driven entirely by local government spending," making the spending cap the foundation of the entire system—cities and counties can expand services in proportion to population growth but can't abuse their taxing power.
State lawmakers looking to replicate Arizona's success should start with a spending cap tied to a hard metric like inflation plus population growth, the report concludes. The brief recommends requiring supermajority voter approval to override spending limits, ensuring that local governments can't simply bypass restrictions whenever they want more revenue. Working together, the three major restrictions keep tax burdens low on both state and local levels—a proven formula that other states can adopt without subsidizing irresponsible local spending.