Homebuyers looking to avoid high property taxes probably shouldn’t move to New Jersey.
The Garden State continued to have the dubious honor of having the nation’s highest property taxes, according to a recent report from personal finance website WalletHub. New Jersey homeowners paid a median of $9,345 in 2022, according to the report.
That’s compared with the typical homeowner who paid just $2,869 in property taxes a year, according to U.S. Census Bureau data cited in the report.
“Americans who are considering moving and want to maximize the amount of money they take home should take into account property tax rates, in addition to other financial factors like the overall cost of living, when deciding on a city,” WalletHub analyst Cassandra Happe said in a statement.
Where are property taxes the highest?
Often, Democratic stronghold states in the Northeast have higher property taxes than Southern, red states, although there are exceptions.
The highest effective tax rate was in New Jersey, at 2.33%. (This is a percentage of the property’s assessed value.) Home prices in the state aren’t cheap either. New Jersey’s median home price was $524,950 in January, according to the most recent Realtor.com® data.
The state was followed by Illinois, which had the second-highest tax rate, at 2.11%, and a median annual property tax of $5,055. Next up were Connecticut, at 2% and $6,484; New Hampshire, at 1.89%, and $6,372; and Vermont, at 1.78% and $4,859.
Rounding out the top 10 were New York, at 1.64% and $6,303; Texas, at 1.63% and $3,872; Wisconsin, at 1.59% and $3,670; Nebraska, at 1.54% and $3,167; and Iowa, at 1.49% and $2,703.
States with higher property tax rates can have lower overall taxes because the charges are a reflection of local home values. So if homes are inexpensive and tax rates are higher, the total amount homeowners pay can be less than in pricier states.
Tax rates typically aren’t uniform throughout a state—and are rising in many areas.
“Property tax rates also vary within states, tending to be higher in urban counties than in rural ones,” William F. Shughart II, a professor in public choice at Utah State University, said in a statement. “Property tax receipts in most jurisdictions are in large part allocated to fund public schools, although they can be spent on financing other so-called public goods, such as 911 response systems and training people responsible for fielding emergency telephone calls.”
Where are property taxes the lowest?
On the other side were the states with the lowest tax rates.
Surprisingly, the blue state of Hawaii had the lowest effective tax rate, at 0.27%. Homeowners in the Aloha State paid about $2,054 in property taxes in 2022.
The state had the nation’s most expensive real estate, with a median $851,250 home price in January, according to the most recent Realtor.com data.
Alabama also had a low tax rate, at 0.27%, with homeowners paying the lowest median property taxes in the country at just $701 a year. It was followed by Colorado, at 0.49% and $2,278; Nevada, at 0.5% and $1,884; and South Carolina, at 0.53% and $1,138.
Four states tied for fifth place with effective tax rates of 0.55%. Homeowners in Utah paid a median of $2,241 annually; Delaware homeowners paid $1,674; Louisiana homeowners paid $1,087; and West Virginia homeowners paid $809 (the second-cheapest annual property taxes in the nation).
The rest of the states with the cheapest property tax rates were Idaho and Arizona, at 0.56%. Annual taxes were $1,872 and $1,786. (Washington, DC, also had a 0.56% tax rate with taxes totaling $3,957 a year.)
“Property taxes are one of the costs of property ownership,” Richard D. Pomp, a law professor at the University of Connecticut, Law School, said in a statement. “They must be viewed the same as the mortgage payments.”
Clare Trapasso, Realtor.com