A two-billion-dollar budget proposal for the future of Minneapolis. A seven percent increase in spending. Mayor Frey, who was reelected this November, is recommending a new budget anticipated to be carried out by August 15th , 2026. The City Council has adopted the budget and will include a proposed property tax levy that will increase the price of Minneapolis homes, which Frey describes as “not a crisis budget,” but a “discipline budget.”
The mayor’s proposal for spending will be solidified on December 11th, when the Minneapolis City Council is scheduled to vote. If approved, Minneapolis will increase its budget by $140 million in the coming of year. However, among federal funding shifts, Minneapolis is still expecting fiscal uncertainty.
“This year’s budget also involved planning for the unknown,” Frey said in his address, where he also questioned whether Minneapolis can continue to rely on federal partnerships under Mr. Trump, who is responsible for ongoing federal cuts.
With higher spending comes higher property taxes, something that has raised concern among many residents who have been affected by property value increases in the past few years following the pandemic, which transformed the housing market. The City Council has increased the property tax levy to as high as 8 percent. Frey initially proposed a 13 percent increase but this rate was lowered through spending cuts.
The proposed property tax will raise an additional $39 million in Minneapolis to pay for essential services like police, fire and road maintenance, according to a Minneapolis budget-in-brief and The Minnesota Daily. The tax levy is the highest the Hennepin County has seen in seven years.
What increasing Property Taxes means for Homeowners
The 2026 budget proposal means that property taxes will be going up for homeowners.
According to Southwest Voices, the owner of a median-valued home will result in a total annual increase of about $186-240, or about $20 per month. This shift occurred because the value of commercial properties decreased relative to residential properties, causing homeowners to bear a greater share of the total property tax levy. There has been a significant decline in commercial property in Downtown Minneapolis, which was affected by the aftermath of the George Floyd protests and the pandemic. With persisting vacancies, damages and rebuilding efforts, progress in the commercial real estate market has been slow, prompting Frey’s high taxes.
A property tax is composed of local and state property taxes. For a typical Minneapolis homeowner, the property tax bill is almost entirely composed of local levies that fund local services. Taxes help support a variety of resources in the county, cities and schools through the local government.
A seven to eight percent increase in property tax may deter homebuyers in the coming year from purchasing new real estate due to higher monthly payments. Current homeowners who secured low mortgage rates during the pandemic, from 3-4 percent, will be disincentivized from selling and therefore less homes will be available on the market.
While the future of home value and property tax remains uncertain as Mayor Frey works diligently to finalize the 2026 budget, we know one thing for sure: DRG is here to make your home-buying experience seamless and stress-free.
If you’d like to talk through the options, I’m happy to jump on a quick call. You can book a time with me here:
https://calendly.com/joe-drgmpls/phone-call-w-joe-grunnet
Looking forward to helping you find a home that fits both your needs and your faith.
Best,
Joe Grunnet
DRG | Minneapolis
Joe@DRGMpls.com
www.DRGMpls.com
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