Property taxes generally rank as one of the most hated taxes – an impressive accomplishment given the general attitude toward all taxes. There is something fundamentally annoying about continually paying taxes on something you already own.
Nevertheless, in many areas, property taxes primarily fund local services. They may be reviled, but they are important.
According to the U.S. Census Bureau, the average property tax is around $2,127 per homeowner and is less than one percent of home values – although areas in the Northeast can have rates well over two percent of home value and property taxes in excess of $8,000, corresponding to high housing prices.
How can you assess how your taxes stack up to others across the nation? Taxes are locally imposed, so they vary greatly by county and municipality. County breakdowns can be found online, occasionally with interactive maps to let you compare your rate or average amount paid with any county in the nation.
Most sites that analyze and compare taxes use a relative frame of reference such as median income or percentage of home value. Let's compare a few of the analyses, all using Census Bureau data but arriving at slightly different results.
From the Tax Foundation's Mean Effective Property Tax Rates for 2015, comparing property taxes on residential (owner-occupied) housing and percentage of the home’s value:
- Best States – The lowest tax state is attractive on many levels: Hawaii, at just 0.28 percent of home value. In increasing order of taxes, the best ten states were: Hawaii, Alabama, Louisiana, Delaware, District of Columbia, South Carolina, West Virginia,Wyoming, Colorado, and Utah at 0.68 percent.
- Worst States – The highest property tax state is New Jersey at 2.38 percent of home value. In descending order of taxes, the worst ten states were: New Jersey, Illinois, New Hampshire, Connecticut, Wisconsin, Texas, Nebraska, Michigan, Vermont, and Rhode Island at 1.67 percent.
Not surprisingly, the South, West and states with less relative urban areas tend to have lower property taxes, while Northeastern states tend to have higher property taxes. Higher urban areas and higher population density typically require more taxes for infrastructure. A few urban areas can skew otherwise rural states.
The WalletHub analyzed the fifty states, including the District Columbia in terms of property taxes. Here are their best and worst:
- Best States – 2016's property taxes by state, in ascending order of taxes: Hawaii, Alabama, Louisiana, Delaware, District of Columbia, South Carolina, West Virginia,Wyoming, Colorado, and Utah at 0.69 percent.
- Worst States – 2016's property taxes by state, in descending order of taxes: New Jersey, Illinois, New Hampshire, Wisconsin, Texas, Connecticut, Nebraska, Michigan, Vermont, and Rhode Island at 1.61 percent.
Where are California and Florida? They are middle-of-the-pack for property taxes. Often, areas with high property taxes have offsetting lower taxes in other areas and vice versa. For example, California has a relatively high state income tax rate. If Washington, D.C. were considered a state, it would rank among the highest for property tax.
Are high property taxes inherently bad? Not really. It depends on whether they are proportionate to the services and infrastructure received. Where do they go and how are they used?
Regardless of whether your taxes are relatively low and high, you deserve the right to question how they are being used – and if they are being used poorly, make your voice heard.