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Property Taxes By State: A Look At The Best And Worst States In The US

10-Minute Read
Published on October 7, 2021
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For new homeowners, the thought of paying even more money after buying your home may feel like a drag. But it’s helpful to know that you’re not alone. Every state requires property taxes. In fact, Americans pay an average of $2,471 in property taxes each year, according to recent U.S. Census data.¹

When looking at property taxes by state, the rates can differ greatly – from less than 0.5% in some areas to more than 2% in others. While every state imposes property taxes on homeowners, it can be helpful to understand how much you might end up paying each year by taking a look at where your state stacks up against others.

We take a look at property taxes across the country and offer tips for how you can lower your property taxes below. We used the state effective property tax rates to get a general look at different property taxes across the nation. The taxes listed are high-level estimates. To find more precise estimates, check your state or local county websites. 

How Property Taxes Are Calculated

Property is taxed based on a percentage of the assessed value of that property. Different types of property will have different assigned values. For example, a vacant lot will have a lower property tax than a piece of property with a home built on it.

When it comes to calculating property taxes for a certain area, this process starts with an assessor evaluating all the properties within the municipality. Next, the local government establishes the amount of money that is to be raised by the property taxes. Then, the property tax rate is calculated and finally, each property owner receives a bill.

How property taxes are calculated can vary depending on state or local government. Some governments choose to tax property by imposing a rate or millage (the amount of tax per thousand dollars of value) on the fair market value of the property. Others impose property tax by a percentage of the market value of a home.

These tax rates can fluctuate, and your home’s value may go up or down. This will affect how much you pay in taxes, so you should be aware that what you paid in property taxes a few years ago may not be what you’ll pay this year.

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Where Does The Money From Property Taxes Go?

Property taxes are used by local governments to raise revenue so that they can provide certain public services. Exemptions and the amount of money that goes towards these services will change depending on where you live. However, the main areas that property tax money goes toward include: 

  • Public schools: Building a new school or making improvements to an existing one will often lead to an increase in property taxes, while also making your area more desirable for newcomers.

  • City parks and green spaces: Property taxes go toward maintaining parks, planting flowers and trees and hosting community programs that take place in the park like festivals and summer camps.

  • Additional services: Property taxes also help pay for portions of museums, public swimming pools and libraries.

  • Road safety and repair: Property taxes help pay for road construction and repair, public transport facilities and traffic signs and lights.

  • Emergency services: Property taxes help pay the salaries of emergency personnel including the fire department, ambulance services and law enforcement. Property taxes also help purchase vehicles, build and improve infrastructure and cover training costs.

  • Local government and administration: The salaries of local government employees are paid for in part by property taxes. Property taxes also help fund local infrastructure like the sewer system.

How Home Values Are Measured

Assessed home value is a yearly measurement taken to estimate the value of your home and determines how much you will pay in taxes. This estimation is created by a municipal property assessor who looks at factors such as the market value or appraised value of your home and the assessment rate, which is generally the same for every property in a given tax jurisdiction.

Factors that may lead to a property tax increase include:

  • Market conditions
  • Other home values in the area
  • Maintenance costs
  • Depreciation
  • Home improvements
  • Neighborhood
  • Adding square footage

Other local factors that may lead to an increase in property taxes are things like road repairs, a new school being built, or an increase to your local government’s budget. If the sales tax revenue in your area dips, your local government may hike property taxes to make up for loss.

On the other hand, if your local government’s budget decreases, your property taxes bill will often decrease. Additionally, things like new construction on vacant lots will help increase property values and spread the tax burden, which will likely lower your property taxes. Check your county’s website for specific property tax exemptions in your area.

Effective Property Tax Rate By State

To compare property tax rates across the United States, we gathered effective property tax rate data from the Tax Foundation’s 2020 report (using 2019 calendar year data – the latest available) and then multiplied that by $350,300, the median home value in the U.S. as of May 2021, according to National Association of REALTORS®.² This gives us a snapshot of what property tax rates may look like across the country.

It’s important to note that effective property tax rates are a high-level way of finding and comparing property tax rates in different parts of the country. The only realistic way to find an approximate estimate of property taxes is to use a state or local property tax estimator. Find your local online tax estimator and applicable exemptions through your state or county website.

A Look At Effective Property Tax Rates Across The U.S.

  1. New Jersey: 2.13%
  2. Illinois : 1.97%
  3. New Hampshire: 1.89%
  4. Vermont: 1.76%
  5. Connecticut: 1.73%
  6. Texas: 1.60%
  7. Nebraska: 1.54%
  8. Wisconsin: 1.53%
  9. Ohio: 1.52%
  10. Pennsylvania: 1.43%
  11. Iowa: 1.43%
  12. Rhode Island: 1.37%
  13. Michigan: 1.31%
  14. New York: 1.30%
  15. Kansas: 1.28%
  16. Maine: 1.20%
  17. South Dakota: 1.14%
  18. Massachusetts: 1.08%
  19. Minnesota: 1.05%
  20. Maryland: 1.01%
  21. Alaska : 0.98%
  22. Missouri: 0.96%
  23. Oregon: 0.91%
  24. North Dakota: 0.88%
  25. Georgia: 0.87%
  26. Florida: 0.86%
  27. Washington: 0.84%
  28. Virginia: 0.84%
  29. Oklahoma: 0.83%
  30. Indiana: 0.81%
  31. North Carolina: 0.78%
  32. Kentucky: 0.78%
  33. Montana: 0.74%
  34. California: 0.70%
  35. Idaho: 0.65%
  36. Tennessee: 0.63%
  37. Mississippi: 0.63%
  38. Arkansas: 0.61%
  39. Arizona: 0.60%
  40. New Mexico: 0.59%
  41. Delaware: 0.59%
  42. Nevada: 0.56%
  43. Utah: 0.56%
  44. South Carolina: 0.53%
  45. West Virginia: 0.53%
  46. Colorado: 0.52%
  47. Wyoming: 0.51%
  48. Louisiana: 0.51%
  49. Alabama: 0.37%
  50. Hawaii: 0.31%

States With Highest Property Tax

New Jersey, Illinois and New Hampshire top the list of states with the highest effective property tax rates. This means that, with the average home price in New Jersey at $500,628 in the first quarter of 2021, 3 the homeowner would pay just over $10,660 in yearly property taxes.

Based on effective tax rates and the U.S. median priced home of $350,330, here’s a list of the top 10 states for property taxes. Keep in mind, these are high-level assumptions using effective property tax rates and a national average home price. To find a more complete estimate, check your local/county website and use the actual value of a home in your area.

  • New Jersey (2.13% effective property tax rate, $7,461 estimated property taxes)
  • Illinois (1.97% effective property tax rate, $6,901 estimated property taxes)
  • New Hampshire (1.89% effective property tax rate, $6,621 estimated property taxes)
  • Vermont (1.76% effective property tax rate, $6,165 estimated property taxes)
  • Connecticut (1.70% effective property tax rate, $6,060 estimated property taxes)
  • Texas (1.60% effective property tax rate, $5,605 estimated property taxes)
  • Nebraska (1.54% effective property tax rate, $5,395 estimated property taxes)
  • Wisconsin (1.53% effective property tax rate, $5,360 estimated property taxes)
  • Ohio (1.52% effective property tax rate, $5,325 estimated property taxes)
  • Pennsylvania (1.43% effective property tax rate, $5,009 estimated property taxes)

 

Some states make up for their high property tax rate by scaling back in other tax categories. For example, New Hampshire has no sales tax but has the third-highest effective property tax rate in the country.

States With Lowest Property Tax

When it comes to the opposite end of the spectrum, Hawaii offers the lowest effective property tax rates in the country at 0.31%. While that low rate may have you excitedly looking up beachfront properties, it’s equally important to note that Hawaii residents paid more than double the national average in-state taxes in 2020.⁴ This is a good example of some states offering lower property tax rates in return for higher rates in other major tax categories.

Additionally, Alabama proves to be a very affordable state for homeowners. Not only does the state boast the second-lowest property tax rates, but Alabama also has the seventh-lowest cost of living.⁵ And if you’re looking for a state that offers a light tax burden, Wyoming has the fourth-lowest effective property tax rate and no state income tax.⁶

Again, these are high-level assumptions using effective property tax rates and a national median home price. To find a more complete estimate, verify with your county website’s online tax estimator using a specific home’s value.

  • Hawaii (0.31% effective property tax rate, $1,086 estimated property taxes)
  • Alabama (0.37% effective property tax rate, $1,296 estimated property taxes)
  • Louisiana (0.51% effective property tax rate, $1,787 estimated property taxes)
  • Wyoming (0.51% effective property tax rate, $1,787 estimated property taxes)
  • Colorado (0.52% effective property tax rate, $1,822 estimated property taxes)
  • West Virginia (0.53% effective property tax rate, $1,857 estimated property taxes)
  • South Carolina (0.53% effective property tax rate, $1,857 estimated property taxes)
  • Utah (0.56% effective property tax rate, $1,962 estimated property taxes)
  • Nevada (0.56% effective property tax rate, $1,962 estimated property taxes)
  • Delaware (0.59% effective property tax rate, $2,067 estimated property taxes)

Average Property Tax Rate By Region

Looking at regions across the country, the Northeast has the highest average property tax rate at 1.41%. This makes sense, as five out of 10 of the states with the highest effective property tax rates are found in that region of the country.

Coming in at the lowest average property tax rate by region is the Southeast. States like Alabama and Louisiana have notably low property tax rates. In Louisiana, the state offers an attractive homestead exemption that reduces the taxable value of owner-occupied properties by $7,500 in assessed value.⁷

A Look At Average Property Tax Rates By Region

  1. Northeast: 1.41%
  2. Midwest: 1.29%
  3. Southwest: 0.91%
  4. West: 0.66%
  5. Southeast: 0.66%

Cities With The Highest Property Taxes

As for cities with the highest property tax rates, several cities in Texas and New Jersey made the list. While New Jersey is a state with the highest effective tax rates in the country, Texas falls at number six on the list. The Lone Star State has no personal income tax, which is a tax category many other states rely on. Texas also allows local taxing authorities to set their own property tax rates. Plus, real estate appraisal values within Texas continue to go up.⁸

These are high-level assumptions using effective property tax rates. To find a more complete estimate, check your county website.

Small Cities With The Highest Property Taxes

Small Cities

Effective Property Tax Rate

Elizabeth, New Jersey

3.18%

Paterson, New Jersey

3.18%

Waterbury, Connecticut

3.16%

Rockford, Illinois

2.67%

Peoria, Illinois

2.59%

Source: Roofstock⁹

Midsize Cities With The Highest Property Taxes

Midsize Cities

Effective Property Tax Rate

Aurora, Illinois

2.51%

Rochester, New York

2.25%

Newark, New Jersey

1.99%

McKinney, Texas

1.95%

Des Moines, Iowa

1.94%

Source: Roofstock¹⁰

Large Cities With The Highest Property Taxes

Large Cities

Effective Property Tax Rate

Milwaukee, Wisconsin

2.17%

El Paso, Texas

2.13%

Fort Worth, Texas

1.86%

San Antonio, Texas

1.85%

Arlington, Texas

1.75%

Source: Roofstock¹¹

How To Lower Your Property Taxes

No matter where you live or what property tax rate your home is taxed at, there are steps you can take to try to lower the amount of property taxes that you pay.

Apply For A Property Tax Exemption

Depending on where you live, some states and local governments offer exemptions to homeowners for real estate taxes owed on their property. These protect certain classes of homeowners and reduce the amount they must pay for their property.

A few classes of homeowners that may be eligible for a property tax exemption include seniors and people with disabilities. Some states offer tax exemptions for seniors that have reached a certain age, but seniors of a certain income level or residency situation may not qualify.

If you have a disability, you may be eligible for an exemption from a portion of your property taxes. Policies vary by where you live, but even if you don’t qualify for an exemption there are other credits you can look into in other tax categories, such as a medical expense deductible on your taxes for adding a ramp to your home.

Members of the Armed Forces and veterans also qualify for property tax exemptions in certain areas of the country. You may also be exempt for a complete waiver from property taxes in certain areas.

Who’s Eligible For A Property Tax Exemption? 

  • Senior
  • Veterans and members of the Armed Forces
  • People with disabilities

File For A Homestead Exemption

A homestead exemption shields a homeowner from paying for a certain dollar amount or percentage of their property tax. They’re called homestead exemptions because these are offered only to a homeowner’s primary residence, not rental or investment properties.

Some states exempt a certain percentage of a home’s value from property taxes, while others set a dollar amount. These exemptions vary widely by state. For example, in Florida, qualifying homeowners can get a tax exemption that reduces the taxable value of their property up to $50,000; in Connecticut, qualifying veterans can get a $1,500 property tax exemption.⁹

Raise Issues With The Tax Assessor

Your property tax bill is based on the assessed value of your property, any exemptions for which you qualify and the property tax rate for where you live. Factors such as your property's size, construction type, age and location can affect your tax bill.

You can request a property tax card from your local town hall that serves as a record of all the information the town has gathered about your property over the years. This card will include specific details about your home such as room size and the number of fixtures.

After reviewing the card, make a note of any inconsistencies. Take those issues to your local tax assessor. They will either make a correction or conduct a re-evaluation. This can sometimes mean a lower property tax assessment that can translate to less money you owe in property taxes.

While property taxes can be just one more expense to think about as you’re buying a home, the money raised from these taxes goes toward public services that greatly improve the quality of life for residents such as by creating new parks, improving roads and funding schools.

Understanding how property taxes work will help you become a more informed homeowner – and it may open your eyes to exemptions that are waiting to be taken advantage of.

Sources:

¹U.S. Census Bureau Quarterly Residential Vacancies and Homeownership, First Quarter 2021

²National Association of REALTORS®

³New Jersey Real-Time News

Hawaii News Now

World Population Review

AARP

Smart Asset

Taxease

Roofstock

¹⁰Roofstock

¹¹Roofstock

¹²Smart Asset

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Victoria Araj

Victoria Araj is a Section Editor for Rocket Mortgage and held roles in mortgage banking, public relations and more in her 15+ years with the company. She holds a bachelor’s degree in journalism with an emphasis in political science from Michigan State University, and a master’s degree in public administration from the University of Michigan.