A Wide Disparity in State Property Taxes

Filed in Economics by on March 8, 2019 7 Comments

There is nearly an $8,000 difference between what residents of the state with the highest property taxes pay compared to those who live in the state with the lowest rate.

NAHB analysis of data from the 2017 American Community Survey and U.S. Census Bureau shows that in 2017, New Jersey continued its perennial distinction as the state with the highest average annual tax bill per home owner. Garden State home owners paid an average of $8,485 in real estate taxes in 2017.

At the opposite end of the spectrum, Alabama ranked 50th among home owners in average  real estate tax paid per year. There, the average real estate tax bill totaled just $678.

The top five states with the highest average annual property taxes are all located in the Northeast:

Rank Average Real Estate Taxes Paid Per Year
1. New Jersey $8,485
2. Connecticut $6,349
3. New York $6,054
4. New Hampshire $5,713
5. Massachusetts $5,192

The states with the lowest average annual property taxes are primarily located in the South:

Rank Average Real Estate Taxes Paid Per Year
50. Alabama   $678
49. West Virginia   $812
48. Mississippi   $967
47. Louisiana $1,005
46. Arkansas $1,012

NAHB economist David Logan looks at the national picture and provides further analysis in this Eye on Housing blog post.

Find out where your state stands on the list.

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  1. CT says:

    $8,485 in NJ. That’s $707/month! That’s more than a lot of people pay in rent! That is double what my student loan payment was!

  2. Marty Knezovich says:

    I think just comparing the average annual property tax might be a bit deceiving. Are the property taxes of all states based on property value? If so, a better comparison might be the property taxes of equal property values, since the average property value also varies from state to state.

  3. Bill Black says:

    This is pretty important to be aware of when making big moves- in our area in Vancouver, WA. and Portland Oregon I use 1.25% of the purchase price for a base ($350,000 x 1.25% = $4,375/12= $365 month) The new homes do not come with an assessed value yet so it is better to assume maximum assessed values and to overestimate vs. being told they may be less and end up more.

    Our tax rate varies from area to area as well with some having more short term school or fire levies issued. Just one county over- taxes are just about 50% of what we pay here. Older homes tend to be less. Best practice is to make sure you are using a Professional that can collect the data in advance.

  4. There are a lot of variables not discussed in this blog. For example, Washington is ranked 12th, but we have no State Income Tax, so we are not affected the same way you would be where you were taxed at both ends. Hawaii, as another example, is ranked 34th, and they do have a State income tax, but a very low sales tax. Their real estate taxes are all piled on the non-residents, while full-time Hawaii residents get a substantial break, so if these numbers only address what the resident Hawaiians pay, the rank of 34th is not at all accurate.

  5. Drew Carter says:

    This is like studying physics in a vacuum. NH (#4) has no sales tax and no income tax. There are too many variables effecting these numbers (other tax sources, population, public expenditures like infrastructure or education, etc) to provide a fair evaluation of these numbers.

  6. LD says:

    I just want to point out NHAB is providing data that is very hard for the average person to find on their own especially in a quick manner. It’s easy to look up an income tax rates and usually fairly easy to look up a sales taxes. It’s very hard to get data that puts together the complex world of taxes on property. So it’s great NAHB has aggregated this data. Also the data shouldn’t remove the influence of property values because that dilutes the reflection of affordability in this metric.

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