New Jersey is number one in property taxes

September 24, 2023

Suburban-neighborhood_nikola-knezevic-sDyXOlpCrAY-unsplash1

The famous saying about all politics being local also applies to taxes, most notably property taxes.

Property taxes are locally levied, usually by counties (or parishes if you're in Louisiana), meaning they vary widely across, and within, the 50 states. Local jurisdictions set the tax rate, but if real estate values increase, even a relatively low rate can mean a big tax bill on your home.

Because of the complicated considerations involved in calculation property taxes, the Tax Foundation's latest analysis took a two-pronged approach.

The Washington, D.C.-based tax policy nonprofit looked at median property tax bills in each county in the United States, and then compared effective property tax rates across states. And they presented the results in two maps, reproduced in this post.

Let's start with the map that shows where people pay the most property taxes.

This image is static, but the Tax Foundation's interactive one lets you see the median amount you and your neighbors in the next county/parish pay on your homes.

I'm in that dark section in the middle of Texas designated as higher, which explains why I whine complain write about real estate taxes so much. Since the Lone Star State has no personal income tax, this levy is the most personal one to the hubby and me.

In Travis County, half of us pay more than the $6,517 median tax amount. Williamson Country homeowners to our north are right on our heels at $6,277. Only Colllin County homeowners in the Dallas-Fort Worth metroplex pay more, a median amount of $6,658.

Sticking with the importance of local taxes theme, I'm picking my county's median property tax rate as this weekend's By the Numbers figure.

But if we head west from our Austin home to Burnet County, the median property tax bill drops dramatically, to $2,911. That's why we went west when we were looking for a home for my mom.

A much lower U.S. average: The average level of property taxes paid in 2021 across the United States was $1,682, according to the Tax Foundation.

The lowest property tax bills in the country are in seven counties or county-equivalents with median property taxes of less than $200 a year in —

Alaska's Northwest Arctic Borough and the Kusilvak Census Area,
Louisiana's Allen, Avoyelles, East Carroll, and West Carroll Parishes, and
Choctaw County in Alabama.

At the other end of the real estate tax scale are 11 counties with median property tax payments that exceed $10,000. They are —

New Jersey's Bergen, Essex, Hunterdon, Morris, Passaic, and Union Counties;
New York's Nassau, New York, Rockland, and Westchester Counties; and
Falls Church in Virginia, an independent suburban District of Columbia city with county-level governance status. It's in Fairfax County, which has a median $6,349 property tax.

Statewide implications: As noted, property tax bills often fluctuate with housing prices, making it difficult to make good comparisons between states.

Further complicating matters, notes the Tax Foundation, is that rates don't mean the same thing from state to state, or even county to county, because the millage is often imposed only on a percentage of actual property value.

However, one way to compare is to look at effective tax rates on owner-occupied housing — the average amount of residential property taxes actually paid, expressed as a percentage of home value, writes Andrey Yushkov, a Senior Policy Analyst with the Center for State Tax Policy at the Tax Foundation.

That's what's shown in the tax think tank's second map, shown below.

In calendar year 2021 (the most recent data available), Tax Foundation researchers found that New Jersey had the highest effective rate on owner-occupied property at 2.23 percent. It was followed by Illinois at 2.08 percent and New Hampshire at 1.93 percent.

The lowest effective rates belong to Hawai'i at 0.32 percent, followed closely by Alabama at 0.40 percent, Colorado at 0.55 percent, and Wyoming at 0.56 percent.

If I didn't hate moving so much, and since civilian relocation costs are no longer tax deductible, I'd try to talk the hubby into packing up and setting up home somewhere else. I might be able to convince him to settle in America's island state, but he's not a Spam (edible or otherwise) fan.

So we'll probably stay put, and keep working on our current home. Then we'll start talking about moving again next year when we get our home's appraisal and subsequent property tax bill.

You also might find these items of interest: