Taxing Loudoun: How much of your paycheck does the county get?

The Loudoun Board of Supervisors is in a big debate over a little number: $1.135.

That’s the current real estate tax rate. It’s how much the county charges a real estate owner per $100 of value.

But there’s more to your real estate tax bill the tax rate. Supervisors raise and lower tax rates all the time, your bill is determined by the assessed value of your property. Past board’s have adopted significant lower tax rate, only to have resident pay ever higher tax bills.

It’s fairly simple math: If your house and the lot it stands on are worth $200,000 at fair market values, divide that number by $100 and get 2,000. Then multiply that by $1.135 and get $2,270. That’s your real estate tax in 2015.

“It’s a combination of the tax rate and the assessment,” said Loudoun County Treasurer H Roger Zurn Jr. “A couple of years ago, they lowered the tax rate, but in fact assessments went up, so the average tax bill in fact went up.”

So how much of your paycheck does the real estate tax eat up?

The Median Househould

To figure it out, let’s imagine a median Loudoun household: a fictional family that earns the median wage and owns a home worth the median home value. At the median income, half of households make more money and half make less. For this example, look at the median income of households that own the house in which they live, since renters aren’t directly paying the real estate tax.

The U.S. Census Bureau estimates that in 2014, the most recent year for which census numbers are available, the median home value in Loudoun County was $474,600. At the 2015 tax rate, $1.135, that means that homeowner paid $5,386.71 in real estate taxes.

How heavy a burden is that on the family? This hypothetical median household also brings in the median 2014 Loudoun County income: $140,392. That means they spent 3.84 percent of their total annual income just on real estate taxes in 2015.

Where Does Loudoun Stand?

Supervisor Suzanne M. Volpe (R-Algonkian) has said that Loudoun has the highest real estate taxes around. On top of it, she says, even with the county’s high median income, living here isn’t cheap.

Taxes as Percentage of Income
Taxes as Percentage of Income

“If you were to compare it across the country, what we have is the highest median household income,” Volpe said. “No one wants to look at the other piece of that puzzle, because in other areas the cost of living is lower, the cost of housing is lower, the cost of even commuting to work is lower.”

So when someone says Loudoun has the highest tax rate, what do they mean? How does that compare to other Virginia counties?

It’s true that Loudoun pays the highest base real estate tax rate among Virginia counties. But as a percentage of income, Loudoun pays more than most, but not all.

The median Prince William County household pays only $3,826 in taxes, about 3.5 percent of income, both less than Loudoun. But the median Fairfax household makes slightly less than the median Loudoun household, and owns a home worth almost $45,000 more. Even though that family pays a lower tax rate of only $1.09, the resulting tax bill is just over 4.1 percent of income.

Outside the capital region, things look very different.

Chesterfield and Henrico counties, the only other counties in the state comparable in size to Loudoun, each have much lower incomes and home values than Loudoun. Each pay tax rates less than a dollar—$0.96 in Chesterfield, and $0.87 in Henrico. Each of those works out to less than 2.5 percent of income.

Loudoun Through History

Loudoun has seen taxes change dramatically over the past decade. Ten years ago, in 2005, the tax rate was only $1.04. That amounted to a $5,399.68 tax bill, and more than 5 percent of the median family’s earnings.

The next year, 2006, home values peaked and the tax rate bottomed out at just $0.89. That year, the bill was $4,973.32, and about 4.59 percent of income.

In 2010, the recession had cratered home values and the tax rate reached its high water mark: $1.30. But even with the highest tax rate in Loudoun’s history, the percentage of household income that went to real estate taxes had dropped to 4.47 percent, because home values had fallen faster than income.

Over time, as home values have fluctuated, incomes increased, and tax bills have risen and fallen, the real estate tax as a percentage of income has dropped steadily. 2015’s percentage was the lowest in the past 10 years.

If We Raise Taxes

Zurn also served as the Sterling District representative on the Board of Supervisors in the 1990s, when tax rates were below a dollar.

“Obviously, the tax rates have gone up, but it’s a misnomer to look at it strictly from a tax-rate perspective,” Zurn said.

County Administrator Tim Hemstreet has recommended a new tax rate of at least $1.14 to meet Loudoun’s budget needs, amounting to an increase of $23.73 on the annual median bill at 2014 property values.

What’s your tax bill? Calculate it here.

The highest advertised rate, $1.17, would fully fund the School Board’s record-setting budget request and is the highest rate the county could charge without starting over. That would increase the bill by $166.11, up to 3.96 percent of income.

 The Bottom Line

But there are a lot of things this broad-stroke analysis doesn’t tell us. For example: How do levels of service compare? How long does it take for an ambulance to arrive?

And things can be very different in individual cases. This year, for example, assessments rose for single-family homes but dropped for townhouses and condominiums.

“So even if [supervisors] kept the rate at an equalized rate, what will happen is, in fact the average bill for somebody who has a townhouse would decrease, but the person who owns a single-family home would increase,” Zurn said.

“In reality, a lot of our families are struggling,” Volpe said. “They’re working very hard and having to be very careful with their budget, and some of them are avoiding what I would call the extras.”

“What I’m trying to do is find value for the taxpayer,” said finance committee Chairman Matthew F. Letourneau (R-Dulles), who added that, overall, the board has historically been generally fiscally conservative. “I think people are willing to pay for good services, and I think people do have certain expectations when it comes to roads and schools. You have to decide what tax rate provides the best bang for the buck.”

So how do you decide what taxes will mean for you? In the end, it’s simple, the county treasurer says.

“I tell them to look at their tax bill,” Zurn said. “You know, you can play all kinds of games by saying, ‘oh, we lowered the tax rate,’ or vice versa. But at the end of the day, it’s what your tax bill says.”

These are all questions the Board of Supervisors will weigh as they launch into budget considerations. The first public hearing will be Thursday, Feb. 25, at 3 p.m. in the boardroom at the county government building in Leesburg. The second will be Saturday, Feb. 27, at 9 p.m. in the school administration building in Ashburn. The third and final will be back in the county boardroom on Monday, Feb. 29, at 6 p.m.

Supervisors are expected to adopt a tax rate along with the rest of the budget on April 5, 2016.

6 thoughts on “Taxing Loudoun: How much of your paycheck does the county get?

  • 2016-02-26 at 9:59 am

    I always find it funny how people ignore all the “special tax districts” that other counties use. Alot of them have special countywide tax districts for public safety or Fire (as Loudoun used to) or transportation that add 5 or 10 cents or more to their rate, but that’s not reported in these kinds of comparisons. And when anyone says “Loudoun has the highest property taxes in the Country”, I just roll my eyes. I have family in Texas and they pay some ungodly property taxes- because there’s no state income tax. Which brings up the other point- There’s no local income (or school) tax in Virginia. I know in Maryland you pay both a state AND local income tax in addition to your property tax. In PA you pay a state income tax, a local income tax (I think) and a separate school district tax directly to your school system, in addition to income tax.

    If someone wants to do a fair comparison, you need to look at ALL the local taxes to see how we stack up. Sure, we pay alot of taxes here, but we get alot of return for that- both in direct services and in services that, even though some of us may not use all of them, lead to higher home values because they make the County a desirable place for people and businesses to locate. Anyone who just wants to talk about rate, without adjusting for everything else, likely has an agenda and is trying to spin the numbers.

  • 2016-02-26 at 10:21 am

    Renss, I was a little disappointed you spent so much time defining “median” and then used the wrong numbers. The median household income is about $120K/yr not $140K/yr. You are talking about the “mean” income which can be skewed by all the millionaires. With that correction, it’s 4.5% of income that’s consumed by the real estate tax for the median household.

    Yes, this can be a complicated subject. The reason we have such high home values is largely due to zoning restrictions. The scarcity of land upon which to build townhomes/apartments/etc. means that the homes that exist cost a LOT more than they would otherwise. That means that when you buy a home, you pay a LOT more in mortgage costs. And even though some mistakenly believe that folks who own their homes outright are not affected by these artificially elevated prices, we should look at the combined mortgage and tax costs for a given home. If your $470K home actually cost you $250K to buy, you would have another $220K to invest. That’s $15K/yr in lost investment income (7% return, or $11K in extra mortgage costs at 5% loan rate) regardless of whether you own outright or have a mortgage. I realize that folks who own a home already want to keep its value high and deter others from moving here. But we should really think about trying to maintain a constant housing price market going forward by rezoning more land to residential densities (real prices drop over time).

    As you can see, the elevated housing prices are not our friend. If you could have purchased that same 4000 sqft (or 1500 or 7000 sqft) house at 20% less, you would be better off even if the tax rate were much higher. Look at housing prices in the Dallas area. They have lots of professional jobs but housing is about 40% less for comparable homes. They have lots of land and much less zoning restrictions. They don’t waste money on mortgages.

    Yes, the lack of a business base does cause us to pay more in residential taxes. But even the businesses that serve Loudoun citizens would just pass their taxes onto their consumers. Businesses that sell to citizens outside the county pass their taxes to non-Loudouners and unquestionably lower our residential taxes.

    We need to control our public spending and our tax rates. A 4.5% tax rate is too high. It’s going to go higher if we let LCPS increase its budget at a 7%+ clip every year through 2021. Both the county and the schools need to produce a 5-year budget estimate. We should force both to explain any deviations from year to year. Only then can we make appropriate long term decisions as any family or business would.

  • 2016-02-26 at 4:04 pm

    I’m not going to nit-pick. This is a great article that puts taxes into perspective for the layman trying to understand the obfuscation of government funding.

  • 2016-02-26 at 6:05 pm

    DD, it’s definitely a topic worth discussing, but by confusing median and mean, LN overestimates the median household income by 17% and under-reports the percentage of income needed to pay those taxes by nearly 0.6% (3.84% vs 4.41%). This means that Loudoun citizens still pay considerably more than Fairfax citizens (4.4% vs 4.1%) in taxes relative to income. I would say that is significant.

    I think we need more of these discussions. Let’s put everything on the table and let folks have an honest debate.

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