As a property owner, understanding real estate property tax is vital. Property tax is a primary source of revenue for local governments and is used to fund public services like schools, roads, and emergency services. Property taxes are a significant expense for property owners, and the amount you pay can vary depending on where you live in the United States. In this article, we will explore real estate property taxes across the US and how they affect property owners.
Property Tax Rates by State: Where Does Your State Rank?
Understanding Property Tax
Property tax is a tax on the value of real estate property. It is usually assessed by the local government, and the tax rate is determined by the local government or the state. Property taxes are used to fund local services like schools, roads, police and fire departments, and other public services.
How Property Tax is Calculated
The amount of property tax you pay is calculated by multiplying the tax rate by the assessed value of your property. The assessed value is determined by the local government, and it is usually a percentage of the market value of the property.
Factors That Affect Property Tax Rates
Property tax rates vary by state and local government. Several factors can affect property tax rates, including:
- Property value: In most cases, the more valuable the property, the higher the property tax will be.
- Location: Property tax rates vary by state and local government, so where your property is located can affect your property tax rate.
- Tax exemptions: Some states and local governments offer tax exemptions for specific groups, such as senior citizens or veterans.
- Property type: The type of property you own can affect your property tax rate. For example, commercial properties may have a higher tax rate than residential properties.
Real Estate Property Tax Across the US
Property taxes vary widely across the US. According to a study by WalletHub, the state with the highest property tax rate is New Jersey, with an average rate of 2.49%. Hawaii has the lowest property tax rate, with an average rate of 0.29%.
States with the Highest Property Tax Rates
Here are the top 5 states with the highest property tax rates:
- New Jersey: 2.49%
- Illinois: 2.27%
- New Hampshire: 2.18%
- Connecticut: 2.14%
- Vermont: 2.04%
States with the Lowest Property Tax Rates
Here are the top 5 states with the lowest property tax rates:
- Hawaii: 0.29%
- Alabama: 0.43%
- Louisiana: 0.51%
- West Virginia: 0.53%
- Wyoming: 0.54%
Real-Estate Property Tax Rates by State
|
Rank |
State |
Effective Real-Estate Tax Rate |
Annual Taxes on $244.9K Home* |
State Median Home Value |
Annual Taxes on Home Priced at State Median Value |
|---|---|---|---|---|---|
| 1 | Hawaii | 0.29% | $700 | $662,100 | $1,893 |
| 2 | Alabama | 0.41% | $1,007 | $157,100 | $646 |
| 3 | Colorado | 0.51% | $1,243 | $397,500 | $2,017 |
| 4 | Nevada | 0.55% | $1,346 | $315,900 | $1,736 |
| 5 | Louisiana | 0.56% | $1,384 | $174,000 | $983 |
| 5 | South Carolina | 0.56% | $1,379 | $181,800 | $1,024 |
| 7 | District of Columbia | 0.57% | $1,402 | $635,900 | $3,641 |
| 8 | Delaware | 0.58% | $1,426 | $269,700 | $1,570 |
| 8 | Utah | 0.58% | $1,418 | $339,700 | $1,967 |
| 10 | West Virginia | 0.59% | $1,437 | $128,800 | $756 |
| 11 | Wyoming | 0.61% | $1,484 | $237,900 | $1,442 |
| 12 | Arkansas | 0.62% | $1,513 | $142,100 | $878 |
| 12 | Arizona | 0.62% | $1,520 | $265,600 | $1,648 |
| 14 | Idaho | 0.63% | $1,546 | $266,500 | $1,682 |
| 15 | Tennessee | 0.66% | $1,606 | $193,700 | $1,270 |
| 16 | California | 0.75% | $1,828 | $573,200 | $4,279 |
| 17 | Mississippi | 0.79% | $1,937 | $133,000 | $1,052 |
| 18 | New Mexico | 0.80% | $1,948 | $184,800 | $1,470 |
| 18 | North Carolina | 0.80% | $1,963 | $197,500 | $1,583 |
| 20 | Virginia | 0.82% | $2,006 | $295,500 | $2,420 |
| 21 | Montana | 0.83% | $2,033 | $263,700 | $2,189 |
| 21 | Indiana | 0.83% | $2,021 | $158,500 | $1,308 |
| 23 | Kentucky | 0.85% | $2,084 | $155,100 | $1,320 |
| 24 | Florida | 0.86% | $2,110 | $248,700 | $2,143 |
| 25 | Oklahoma | 0.90% | $2,194 | $150,800 | $1,351 |
| 25 | Georgia | 0.90% | $2,192 | $206,700 | $1,850 |
| 27 | Oregon | 0.93% | $2,266 | $362,200 | $3,352 |
| 28 | Washington | 0.94% | $2,311 | $397,600 | $3,752 |
| 29 | Missouri | 0.98% | $2,389 | $171,800 | $1,676 |
| 30 | North Dakota | 1.00% | $2,441 | $209,900 | $2,092 |
| 31 | Maryland | 1.07% | $2,628 | $338,500 | $3,633 |
| 32 | Minnesota | 1.11% | $2,708 | $250,200 | $2,767 |
| 33 | Massachusetts | 1.20% | $2,936 | $424,700 | $5,091 |
| 34 | Alaska | 1.22% | $3,000 | $282,800 | $3,464 |
| 35 | South Dakota | 1.24% | $3,040 | $187,800 | $2,331 |
| 36 | Maine | 1.28% | $3,143 | $212,100 | $2,722 |
| 37 | Kansas | 1.43% | $3,500 | $164,800 | $2,355 |
| 38 | Michigan | 1.48% | $3,630 | $172,100 | $2,551 |
| 39 | Ohio | 1.53% | $3,748 | $159,900 | $2,447 |
| 39 | Pennsylvania | 1.53% | $3,751 | $197,300 | $3,022 |
| 39 | Rhode Island | 1.53% | $3,752 | $292,600 | $4,483 |
| 42 | Iowa | 1.57% | $3,843 | $160,700 | $2,522 |
| 43 | Nebraska | 1.67% | $4,102 | $174,100 | $2,916 |
| 44 | New York | 1.73% | $4,231 | $340,600 | $5,884 |
| 44 | Wisconsin | 1.73% | $4,243 | $200,400 | $3,472 |
| 46 | Texas | 1.74% | $4,255 | $202,600 | $3,520 |
| 47 | Vermont | 1.90% | $4,652 | $240,600 | $4,570 |
| 48 | New Hampshire | 2.09% | $5,120 | $288,700 | $6,036 |
| 49 | Connecticut | 2.15% | $5,256 | $286,700 | $6,153 |
| 50 | Illinois | 2.23% | $5,465 | $212,600 | $4,744 |
| 51 | New Jersey | 2.47% | $6,057 | $355,700 | $8,797 |
*$244,900 is the median home value in the U.S. as of 2021, the year of the most recent available data.
Differences in Property Tax Rates by Region
Property tax rates also vary by region within the United States. According to a study by the National Association of Realtors, the Northeast and Midwest have the highest property tax rates, while the South and West have lower property tax rates.
Trends in Property Tax Rates
Property tax rates have been on the rise in recent years. According to the National Association of Realtors, property tax rates increased by an average of 4% from 2017 to 2018.
How to Lower Your Property Tax
There are several ways you can lower your property tax bill:
- Challenge your property tax assessment: If you believe your property tax assessment is too high, you can challenge it. Contact your local tax assessor’s office to learn more about the appeal process.
- Take advantage of tax exemptions: Some states and local governments offer tax exemptions for specific groups, such as senior citizens or veterans.
- Make energy-efficient improvements: Some states offer tax incentives for making energy-efficient improvements to your property.
- Consider appealing for a homestead exemption: Many states offer homestead exemptions that can lower your property tax bill.
- Keep your property well-maintained: A well-maintained property can help to keep its value down, which can lower your property tax bill.
Conclusion
Real estate property tax rates can vary widely across the US, and they are a significant expense for property owners. Understanding how property taxes are calculated and what factors can affect your property tax rate can help you to better manage your property tax bill. By taking advantage of tax exemptions, making energy-efficient improvements, and keeping your property well-maintained, you may be able to lower your property tax bill.
FAQs
- What is the purpose of property tax?
- Property tax is used to fund local services like schools, roads, police and fire departments, and other public services.
- How is property tax calculated?
- Property tax is calculated by multiplying the tax rate by the assessed value of your property.
- Can you challenge your property tax assessment?
- Yes, you can challenge your property tax assessment if you believe it is too high.
- What are some ways to lower your property tax bill?
- You can take advantage of tax exemptions, make energy-efficient improvements, and keep your property well-maintained to lower your property tax bill.
- How do property tax rates vary by region in the US?
- According to a study by the National Association of Realtors, the Northeast and Midwest have the highest property tax rates, while the South and West have lower property tax rates.