The US states with the highest and lowest property tax rates have been revealed in a new report illustrating the different tax burdens that households can face, depending on where they live. In analysis, which should prove of interest to anyone looking to move home, Hawaii has the lowest property tax rate at $606, almost 9 times lower than the highest rate seen in New Jersey, where the average household must pay out $5,419 each year.
Homebuyers should be all-too familiar with the need to pay out for property taxes alongside their usual mortgage payments. And with tax season underway, it’s vital to remember that the property tax deduction is one benefit that homeowners should take advantage of when loading up their tax software to file their returns.
“Consideration of property tax is not the most exciting part of the home buying process, but it is incredibly important and should always be considered,” Natasha N. Varyani, Associate Professor of Law – New England Law, Boston, told WalletHub, which compiled the data. “Often it is overlooked because it is not included in the list price of real estate, and it is an obligation that will be attached to the property forever.”
The states with the lowest property taxes
The numbers have been crunched using U.S. Census Bureau data, with the real estate property tax rates calculated by dividing the median tax payment by the median home price in each state. The resulting rates were then used to work out the dollar amount of property tax paid on a house worth $217,500 - the median value for a home in the U.S.
While the average American household pays $2,471 on property taxes each year, there are 14 states where bills typically fall below $1,500. Outside of Hawaii, annual property taxes based on the national average home value are next lowest in Alabama at $895, and then Colorado at $1,113.
| State | Annual taxes on $217,500 home | Effective real-estate tax rate | State median home value | Annual taxes on home priced at state median value |
|---|---|---|---|---|
| Hawaii | $606 | 0.28% | $615,300 | $1,715 |
| Alabama | $895 | 0.41% | $142,700 | $587 |
| Colorado | $1,113 | 0.51% | $343,300 | $1,756 |
| Louisiana | $1,187 | 0.55% | $163,100 | $890 |
| District of Columbia | $1,221 | 0.56% | $601,500 | $3,378 |
| South Carolina | $1,238 | 0.57% | $162,300 | $924 |
| Delaware | $1,240 | 0.57% | $251,100 | $1,431 |
| West Virginia | $1,269 | 0.58% | $119,600 | $698 |
| Nevada | $1,310 | 0.60% | $267,900 | $1,614 |
| Wyoming | $1,319 | 0.61% | $220,500 | $1,337 |
The states with the highest property taxes
Taking the dubious honor of having the highest property taxes is New Jersey at an average of $5,419, followed by Illinois at $4,942 and New Hampshire at $4,738. Overall, property taxes in Blue States were found to average $2,722, some 31% higher than the average of $2,076 seen in Red States.
However, when it comes to calculating the average paid on property taxes for a home priced at a state's median home value - rather than the national average - many residents of New Jersey will be paying well above $8,000 a year.
| State | Annual taxes on $217,500 home | Effective real-estate tax rate | State median home value | Annual taxes on home priced at state median value |
|---|---|---|---|---|
| New Jersey | $5,419 | 2.49% | $335,600 | $8,362 |
| Illinois | $4,942 | 2.27% | $194,500 | $4,419 |
| New Hampshire | $4,738 | 2.18% | $261,700 | $5,701 |
| Connecticut | $4,658 | 2.14% | $275,400 | $5,898 |
| Vermont | $4,135 | 1.90% | $227,700 | $4,329 |
| Wisconsin | $4,027 | 1.85% | $180,600 | $3,344 |
| Texas | $3,907 | 1.80% | $172,500 | $3,099 |
| Nebraska | $3,754 | 1.73% | $155,800 | $2,689 |
| New York | $3,749 | 1.72% | $313,700 | $5,407 |
| Rhode Island | $3,548 | 1.63% | $261,900 | $4,272 |
Renters should take note as well
Although almost two-thirds of Americans are homeowners and explicitly subject to property taxes, renters are being urged to take note of the figures too, because of the impact the taxes can have on rental costs.
“While most home buyers consider property taxes in deciding where to move, renters should also be aware of local taxes and services,” Stephanie Leiser, Lecturer in Public Policy, Ford School – University of Michigan told the website. “While renters may not directly pay the property tax bill, their landlords will bake those expenses into their rent payments.”
And for renters about to file tax returns, it's also worth checking whether property taxes are payable as part of your lease agreement. If they are, it's possible to deduct that portion of your rent or any property tax you pay directly.
- Find more essential tax-filing reminders for the 2021 tax season
