Property taxes are a significant burden for many American homeowners, often representing a substantial portion of their annual expenses. In some states, property taxes can amount to thousands of dollars per year, placing financial strain on families, particularly those on fixed incomes or in high-cost areas. A presidential executive order, while limited in scope due to constitutional and legal constraints, could potentially alleviate this burden by leveraging existing federal tax mechanisms, such as enhancing the State and Local Tax (SALT) deduction and expanding homeowner tax credits. This article written by author, James Dean explores how such an executive order could be structured, its potential impact, and the challenges it might face.
The Current Landscape of Property Taxes and Federal Tax Policy
Property taxes are levied by local governments and vary widely across the United States, with average effective rates ranging from 0.31% in Hawaii to 2.13% in New Jersey, according to 2023 data from the Tax Foundation. For a homeowner with a $300,000 property, this translates to annual taxes of $930 to $6,390, depending on the state. These taxes fund essential services like schools, infrastructure, and public safety, but their rising costs have sparked calls for relief.
The federal tax code already provides some relief through the SALT deduction, which allows taxpayers to deduct certain state and local taxes, including property taxes, from their federal taxable income. However, the 2017 Tax Cuts and Jobs Act (TCJA) capped the SALT deduction at $10,000 per year for both individuals and married couples filing jointly. This cap disproportionately affects homeowners in high-tax states like New York, California, and New Jersey, where property taxes alone can exceed this limit.
Additionally, homeowners can benefit from federal tax provisions like the mortgage interest deduction and certain energy-efficient home improvement credits. However, these measures are often insufficient to offset the growing burden of property taxes, particularly for middle-class families or seniors.
How an Executive Order Could Address Property Taxes
While the president cannot directly eliminate property taxes—since they are imposed by state and local governments—an executive order could influence federal tax policy to provide indirect relief. Here’s how such an order could work:
1. Increase the SALT Deduction Cap
An executive order could direct the Department of the Treasury and the Internal Revenue Service (IRS) to adjust the SALT deduction cap, either by raising it significantly or eliminating it entirely for a specified period. For example, increasing the cap to $50,000 or removing it altogether would allow homeowners in high-tax states to deduct their full property tax payments from their federal taxable income, reducing their overall tax liability.
This approach would require the Treasury to issue new regulatory guidance, interpreting the TCJA in a way that prioritizes homeowner relief. For instance, the order could instruct the IRS to create a temporary exemption for property taxes within the SALT framework, arguing that the cap disproportionately harms middle-class homeowners. Such a move would effectively lower the federal tax burden for homeowners, freeing up income to cover property taxes.
Impact: A higher SALT cap would provide immediate relief to homeowners in high-tax jurisdictions. For example, a homeowner paying $15,000 in property taxes in New York could deduct the full amount, reducing their federal taxable income and potentially saving thousands in federal taxes, depending on their tax bracket.
2. Expand Tax Credits for Homeowners
An executive order could also direct the IRS to enhance or create new federal tax credits specifically for homeowners. Unlike deductions, which reduce taxable income, tax credits directly reduce the amount of tax owed, offering more substantial relief.
Possible credits could include:
- Property Tax Relief Credit: A refundable tax credit equal to a percentage (e.g., 50%) of property taxes paid, up to a certain limit (e.g., $5,000). This would directly offset property tax costs and could be targeted at low- and middle-income homeowners to maximize impact.
- Senior Homeowner Credit: A targeted credit for homeowners over a certain age (e.g., 65) to alleviate the burden on retirees, who often face fixed incomes but rising property taxes.
- First-Time Homeowner Credit: An expanded credit for first-time buyers to offset property taxes in the initial years of homeownership, encouraging wealth-building through property ownership.
The executive order could instruct the Treasury to use existing authority under the tax code to implement these credits administratively, bypassing the need for immediate congressional approval.
Impact: A $5,000 refundable property tax credit could reduce or eliminate the property tax burden for millions of homeowners, particularly in states with lower or moderate property tax rates. For example, in states like Alabama or South Carolina, where average property taxes are below $2,000, such a credit could effectively eliminate the tax for many households.
3. Encourage State-Level Reforms
While an executive order cannot directly alter state tax policies, it could incentivize states to reduce property taxes by tying federal funding or tax benefits to state-level reforms. For example, the order could direct the Department of Housing and Urban Development (HUD) to prioritize grants for states that implement property tax relief programs for low-income or elderly homeowners. Alternatively, it could offer enhanced federal tax credits to homeowners in states that cap property tax rates or assessments.
Impact: This approach would create a carrot-and-stick mechanism, encouraging states to lower property taxes while providing federal support to offset lost revenue. States might respond by freezing property tax assessments for seniors or offering homestead exemptions, further reducing the tax burden.
Legal and Practical Considerations
The president’s authority to issue executive orders is not unlimited, and any attempt to modify tax policy would face scrutiny. Here are key considerations:
- Legal Authority: The Treasury and IRS have some discretion to interpret tax laws and issue regulations, but major changes to the SALT cap or new tax credits may require congressional approval. An executive order pushing the boundaries of existing authority could face legal challenges from states, taxpayers, or political opponents. For example, the Supreme Court has previously upheld the SALT cap, and any attempt to bypass it could be seen as overreach.
- Budgetary Impact: Increasing the SALT deduction or introducing new tax credits would reduce federal revenue, potentially adding billions to the deficit. The Congressional Budget Office (CBO) estimated in 2020 that removing the SALT cap entirely could cost $620 billion over a decade. An executive order would need to justify these costs or identify offsetting revenue sources, such as closing tax loopholes.
- Political Pushback: High-tax states, primarily Democratic-leaning, would welcome SALT cap relief, but low-tax states, often Republican-leaning, might argue it unfairly benefits wealthier regions. Balancing these interests would be critical to avoid partisan gridlock or legal challenges.
- Administrative Feasibility: The IRS could implement changes to deductions or credits relatively quickly through regulatory guidance, but large-scale reforms might strain agency resources, especially if new credits require complex eligibility criteria.
Potential Benefits for Homeowners
Many are calling in states like Ohio to eliminate property taxes. Why should people in Ohio be taxed forever on a real estate transaction that occurred years ago. If you buy a pair of shoes, do you pay taxes forever? No ... property taxes should be illegal. Use other means to raise taxes like increased sales tax where people can choose to buy items or not. It promotes great freedom, greater choice by individuals. Increase sin taxes on alcohol, sports betting, cigarette, marijuana etc. Consider, a county "education" tax, where parents of students in the community pay a little more, and seniors with no kids do not pay.
A well-crafted executive order could deliver significant relief to homeowners:
- Financial Relief: Increasing the SALT cap or introducing tax credits could save homeowners thousands of dollars annually, particularly in high-tax states or for low-income households.
- Economic Stimulus: Reducing the property tax burden would leave more disposable income for homeowners, boosting consumer spending and local economies.
- Equity for Seniors and Low-Income Households: Targeted credits could protect vulnerable populations, such as retirees or first-time buyers, from being priced out of their homes.
- Encouraging Homeownership: Lower effective tax burdens could make homeownership more accessible, supporting wealth-building for middle-class families.
Challenges and Alternatives
Despite its potential, an executive order alone cannot fully eliminate property taxes, as they are fundamentally a state and local issue. Congressional action would be needed for permanent, structural changes, such as amending the TCJA or creating new tax credit programs. Additionally, states reliant on property tax revenue might resist federal incentives that reduce their fiscal autonomy.
As an alternative, the president could work with Congress to pass bipartisan legislation, such as the SALT Deduction Fairness Act, which has been proposed in various forms to raise or eliminate the SALT cap. Pairing this with expanded homeowner credits could achieve similar goals with greater legal and political stability.
Conclusion
A presidential executive order could provide meaningful relief from property taxes by increasing the SALT deduction cap and expanding federal tax credits for homeowners. While such an order would face legal, budgetary, and political hurdles, it could deliver immediate financial benefits to millions of Americans, particularly in high-tax states or among vulnerable populations. However, for lasting reform, collaboration with Congress and state governments would be essential. By leveraging federal tax policy creatively, the president could ease the burden of property taxes, promote economic equity, and support the American dream of homeownership.
*Note: This article assumes no specific knowledge of pending executive orders or legislation as of August 20, 2025, and is based on general tax policy principles and publicly available data.