Published: June 19, 2019
Used by the local government to provide public services such as fire protection, schools, and civil improvements, property taxes are an additional tax most commonly paid through a homeowner’s mortgage. This tax is based off the home’s value, making it variable upon factors like location, size, and construction, and can be either a small expense or a large burden. According to WalletHub, the average American household spends $2,279 on property taxes each year. This rate can fluctuate based on home improvement, changes in the area, and the amount of taxes that commercial, industrial, and utility property taxes owners pay.
The tax is a major component for the 78% of renters who believe it is more affordable to rent than to buy a home, according to Freddie Mac. This, in conjunction with other factors, has contributed to the decline in the housing market, with sales down nearly 5% in the month of March.
As individuals are beginning the home searching processing, it is important for prospective buyers to research. USA Today & the Lincoln Institute of Land Policy have teamed up to rank property taxes based on location and their report provides a quality analysis on the differentiation of tax rates across states.
The newspaper explained that “USA TODAY ranked property taxes among states by the effective tax rate for homeowners, rather than the median tax paid, which is affected by overall home values.”
Out of the 50 states, New Jersey has the highest property taxes with a median rate of 2.35%, costing homeowners an average of $7,410 annually. Close behind is Illinois with a 2.3% tax rate and New Hampshire at 2.15%.
States with the lowest property tax rates included Hawaii, at 0.27% and Alabama at 0.43%.
Below is a list of the 10 best and worst states for property taxes and their average tax rate:
New Jersey: 2.35%
New Hampshire: 2.15%
Rhode Island: 1.63%
Washington, D.C.: 0.56%
South Carolina: 0.57%
West Virginia: 0.58%