[cnxvideo id=”655411″ placement=”ros”]Property taxes are different from income and sales taxes. They do not depend on how much money you earn or on how much you spend. Property taxes are based entirely on how much the property you own is worth — a determination belonging to the tax assessor. Because property taxes are collected locally, taxpayers are relatively acquainted with the services their property tax bills are funding.
A range of government bodies, including cities, counties, school boards, safety departments, and utility commissions rely heavily on property tax collections. Across these governments and municipalities property taxes are levied in a variety of ways. The share of real property values collected in taxes also varies considerably between states.
Using data from the Tax Foundation, 24/7 Wall St. reviewed property taxes levied in each state as a percentage of home values. The effective property tax rate is as high as 2.11% in New Jersey, and as low as 0.28% in Hawaii. The average rate across the country is 1.20%.
Click here to see the states with the highest (and lowest) property taxes.
Property tax collections serve as the principal source of income for local governments and typically directly fund functions such as fire and police departments as well as public schools. Generally speaking, higher effective property tax burdens across a state reflect greater demand services as well as more services provided by local governments.
In an interview with 24/7 Wall St., Scott Drenkard, director of state projects at the Tax Foundation, explained that the reasons for high property taxes can also vary substantially. The difference between New Jersey and New Hampshire — the states with the highest and second highest effective property tax rates — is one example. According to Drenkard, New Jersey’s nation-leading effective property tax rate is largely due to the high number of local municipalities, which increases the cost of local services for local residents. State and local governments in New Hampshire, by contrast, rely disproportionately on property tax revenue because the state levies no income or sales tax.
The difference between a high property tax rate in one state and a low rate in another also partially depends on what residents are willing to pay. “There are all sorts of things people are willing to pay slightly higher taxes for,” Drenkard said. While the high number of municipal governments in New Jersey may strike some as inefficient, others may prefer the quaint, small-town atmosphere that tends to result from such local government models.
The presence of major metropolitan areas, which tend to contain a range of benefits for businesses and individuals, from smooth-running utility systems to good restaurants, also contributes to higher property taxes. The high property tax burdens across New Jersey, New York, Texas, and Illinois — all in the top 15 highest property tax states — are likely largely due to the metropolitan centers of New York City, Chicago, and Houston.
States with high property tax rates tend to collect more in property taxes per capita. Nationwide, states and municipalities collect approximately $1,500 per capita annually on average. In states with property tax rates below the national average of 1.2%, per capita collections exceed the national average in only one state, Wyoming. In 16 of the 25 states with relatively high property tax rates, per capita collections exceed the national average.
This pattern is due partially to high home values in states with high property tax rates, although plenty of states with low property tax rates have very high home values. Hawaii, for example, has the lowest property tax burden but the highest median home value, at $566,900.
To identify the states with the highest and lowest property taxes, 24/7 Wall St. reviewed 2014 calendar year average effective property tax rates on owner-occupied housing in each state from the Tax Foundation. To calculate the effective rate, the Tax Foundation divided all property taxes paid by the total value of all owner-occupied housing units. Taxes paid by businesses, renters, and others were excluded from the Tax Foundation’s calculation. Total property tax collections per capita from 2006 through 2013, the sources of tax collections by tax type for 2012, and state and local tax burdens as a percentage of state income for each state in 2013 also came from the Tax Foundation. Household median income and median home value came from the U.S. Census Bureau’s 2015 American Community Survey.
These are the states with the highest and lowest property tax rates.
50. Hawaii
> Effective property tax rate: 0.3%
> Median home value: $566,900 (the highest)
> Per capita property tax collections: $943 (13th lowest)
> Median household income: $73,486 (2nd highest)
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49. Alabama
> Effective property tax rate: 0.4%
> Median home value: $134,100 (7th lowest)
> Per capita property tax collections: $548 (the lowest)
> Median household income: $44,765 (4th lowest)
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48. Louisiana
> Effective property tax rate: 0.5%
> Median home value: $155,600 (18th lowest)
> Per capita property tax collections: $849 (9th lowest)
> Median household income: $45,727 (7th lowest)
47. Wyoming
> Effective property tax rate: 0.5%
> Median home value: $212,500 (19th highest)
> Per capita property tax collections: $2,173 (7th highest)
> Median household income: $60,214 (17th highest)
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46. West Virginia
> Effective property tax rate: 0.5%
> Median home value: $112,100 (the lowest)
> Per capita property tax collections: $798 (6th lowest)
> Median household income: $42,019 (3rd lowest)
45. Delaware
> Effective property tax rate: 0.6%
> Median home value: $240,200 (15th highest)
> Per capita property tax collections: $825 (7th lowest)
> Median household income: $61,255 (14th highest)
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44. South Carolina
> Effective property tax rate: 0.6%
> Median home value: $148,600 (14th lowest)
> Per capita property tax collections: $1,077 (20th lowest)
> Median household income: $47,238 (8th lowest)
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43. Colorado
> Effective property tax rate: 0.6%
> Median home value: $283,800 (8th highest)
> Per capita property tax collections: $1,333 (24th highest)
> Median household income: $63,909 (11th highest)
42. Utah
> Effective property tax rate: 0.6%
> Median home value: $234,600 (16th highest)
> Per capita property tax collections: $952 (14th lowest)
> Median household income: $62,912 (13th highest)
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41. Arkansas
> Effective property tax rate: 0.6%
> Median home value: $120,700 (3rd lowest)
> Per capita property tax collections: $659 (3rd lowest)
> Median household income: $41,995 (2nd lowest)
40. Mississippi
> Effective property tax rate: 0.7%
> Median home value: $112,700 (2nd lowest)
> Per capita property tax collections: $899 (11th lowest)
> Median household income: $40,593 (the lowest)
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39. Arizona
> Effective property tax rate: 0.7%
> Median home value: $194,300 (22nd highest)
> Per capita property tax collections: $1,009 (18th lowest)
> Median household income: $51,492 (20th lowest)
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38. New Mexico
> Effective property tax rate: 0.7%
> Median home value: $164,100 (21st lowest)
> Per capita property tax collections: $685 (4th lowest)
> Median household income: $45,382 (6th lowest)
37. Nevada
> Effective property tax rate: 0.7%
> Median home value: $221,400 (18th highest)
> Per capita property tax collections: $972 (16th lowest)
> Median household income: $52,431 (22nd lowest)
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36. California
> Effective property tax rate: 0.7%
> Median home value: $449,100 (2nd highest)
> Per capita property tax collections: $1,365 (22nd highest)
> Median household income: $64,500 (9th highest)
35. Idaho
> Effective property tax rate: 0.7%
> Median home value: $176,300 (24th lowest)
> Per capita property tax collections: $888 (10th lowest)
> Median household income: $48,275 (11th lowest)
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34. Montana
> Effective property tax rate: 0.8%
> Median home value: $209,500 (20th highest)
> Per capita property tax collections: $1,407 (20th highest)
> Median household income: $49,509 (14th lowest)
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33. Tennessee
> Effective property tax rate: 0.8%
> Median home value: $150,600 (15th lowest)
> Per capita property tax collections: $838 (8th lowest)
> Median household income: $47,275 (9th lowest)
32. Kentucky
> Effective property tax rate: 0.8%
> Median home value: $130,000 (5th lowest)
> Per capita property tax collections: $732 (5th lowest)
> Median household income: $45,215 (5th lowest)
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31. Virginia
> Effective property tax rate: 0.8%
> Median home value: $257,800 (12th highest)
> Per capita property tax collections: $1,430 (18th highest)
> Median household income: $66,262 (8th highest)
30. North Carolina
> Effective property tax rate: 0.8%
> Median home value: $160,100 (20th lowest)
> Per capita property tax collections: $903 (12th lowest)
> Median household income: $47,830 (10th lowest)
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29. Oklahoma
> Effective property tax rate: 0.9%
> Median home value: $126,800 (4th lowest)
> Per capita property tax collections: $595 (2nd lowest)
> Median household income: $48,568 (12th lowest)
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28. Indiana
> Effective property tax rate: 0.9%
> Median home value: $131,000 (6th lowest)
> Per capita property tax collections: $968 (15th lowest)
> Median household income: $50,532 (16th lowest)
27. Georgia
> Effective property tax rate: 0.9%
> Median home value: $159,300 (19th lowest)
> Per capita property tax collections: $1,011 (19th lowest)
> Median household income: $51,244 (19th lowest)
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26. Washington
> Effective property tax rate: 0.9%
> Median home value: $284,000 (7th highest)
> Per capita property tax collections: $1,350 (23rd highest)
> Median household income: $64,129 (10th highest)
25. Florida
> Effective property tax rate: 1.0%
> Median home value: $179,800 (25th lowest)
> Per capita property tax collections: $1,216 (23rd lowest)
> Median household income: $49,426 (13th lowest)
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24. North Dakota
> Effective property tax rate: 0.9%
> Median home value: $180,900 (23rd highest)
> Per capita property tax collections: $1,140 (21st lowest)
> Median household income: $60,557 (16th highest)
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23. Maryland
> Effective property tax rate: 1.0%
> Median home value: $299,800 (5th highest)
> Per capita property tax collections: $1,504 (17th highest)
> Median household income: $75,847 (the highest)
22. Missouri
> Effective property tax rate: 1.0%
> Median home value: $147,800 (13th lowest)
> Per capita property tax collections: $977 (17th lowest)
> Median household income: $50,238 (15th lowest)
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21. Alaska
> Effective property tax rate: 1.0%
> Median home value: $259,600 (11th highest)
> Per capita property tax collections: $1,913 (10th highest)
> Median household income: $73,355 (3rd highest)
20. Oregon
> Effective property tax rate: 1.0%
> Median home value: $264,100 (10th highest)
> Per capita property tax collections: $1,285 (25th lowest)
> Median household income: $54,148 (25th lowest)
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19. Minnesota
> Effective property tax rate: 1.1%
> Median home value: $200,000 (21st highest)
> Per capita property tax collections: $1,547 (15th highest)
> Median household income: $63,488 (12th highest)
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18. Masschusetts
> Effective property tax rate: 1.1%
> Median home value: $352,100 (3rd highest)
> Per capita property tax collections: $2,069 (8th highest)
> Median household income: $70,628 (6th highest)
17. Maine
> Effective property tax rate: 1.2%
> Median home value: $180,300 (24th highest)
> Per capita property tax collections: $1,907 (11th highest)
> Median household income: $51,494 (21st lowest)
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16. South Dakota
> Effective property tax rate: 1.2%
> Median home value: $152,800 (17th lowest)
> Per capita property tax collections: $1,231 (24th lowest)
> Median household income: $53,017 (23rd lowest)
15. Kansas
> Effective property tax rate: 1.3%
> Median home value: $141,200 (11th lowest)
> Per capita property tax collections: $1,425 (19th highest)
> Median household income: $53,906 (24th lowest)
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14. New York
> Effective property tax rate: 1.4%
> Median home value: $293,500 (6th highest)
> Per capita property tax collections: $2,494 (4th highest)
> Median household income: $60,850 (15th highest)
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13. Iowa
> Effective property tax rate: 1.4%
> Median home value: $136,100 (8th lowest)
> Per capita property tax collections: $1,515 (16th highest)
> Median household income: $54,736 (25th highest)
12. Michigan
> Effective property tax rate: 1.5%
> Median home value: $137,500 (10th lowest)
> Per capita property tax collections: $1,320 (25th highest)
> Median household income: $51,084 (18th lowest)
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11. Pennsylvania
> Effective property tax rate: 1.5%
> Median home value: $170,600 (23rd lowest)
> Per capita property tax collections: $1,376 (21st highest)
> Median household income: $55,702 (21st highest)
10. Rhode Island
> Effective property tax rate: 1.5%
> Median home value: $241,000 (14th highest)
> Per capita property tax collections: $2,282 (6th highest)
> Median household income: $58,073 (19th highest)
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9. Connecticut
> Effective property tax rate: 1.5%
> Median home value: $270,900 (9th highest)
> Per capita property tax collections: $2,726 (2nd highest)
> Median household income: $71,346 (5th highest)
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8. Ohio
> Effective property tax rate: 1.6%
> Median home value: $136,400 (9th lowest)
> Per capita property tax collections: $1,215 (22nd lowest)
> Median household income: $51,075 (17th lowest)
7. Nebraska
> Effective property tax rate: 1.7%
> Median home value: $141,600 (12th lowest)
> Per capita property tax collections: $1,649 (13th highest)
> Median household income: $54,996 (24th highest)
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6. Texas
> Effective property tax rate: 1.7%
> Median home value: $152,000 (16th lowest)
> Per capita property tax collections: $1,560 (14th highest)
> Median household income: $55,653 (22nd highest)
5. Vermont
> Effective property tax rate: 1.7%
> Median home value: $223,700 (17th highest)
> Per capita property tax collections: $2,331 (5th highest)
> Median household income: $56,990 (20th highest)
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4. Wisconsin
> Effective property tax rate: 1.7%
> Median home value: $168,300 (22nd lowest)
> Per capita property tax collections: $1,843 (12th highest)
> Median household income: $55,638 (23rd highest)
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3. Illinois
> Effective property tax rate: 2.0%
> Median home value: $180,300 (24th highest)
> Per capita property tax collections: $1,982 (9th highest)
> Median household income: $59,588 (18th highest)
2. New Hampshire
> Effective property tax rate: 2.0%
> Median home value: $244,500 (13th highest)
> Per capita property tax collections: $2,690 (3rd highest)
> Median household income: $70,303 (7th highest)
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1. New Jersey
> Effective property tax rate: 2.1%
> Median home value: $322,600 (4th highest)
> Per capita property tax collections: $2,989 (the highest)
> Median household income: $72,222 (4th highest)
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