Detailed Findings & Methodology
States collect property taxes in a variety of ways. Some states impose a millage, charging a tax amount per thousand dollars on the fair market value of a property. Other states may only charge taxes on a percentage of the property’s assessed market value. States also have different rules as to how property taxes are charged throughout their municipalities — some require uniform taxes throughout the state, some impose caps on how much property taxes can rise in a year, and some also offer tax abatements for veterans and senior citizens.
As Kaeding noted, each state has its own unique blend of taxes to maintain a balanced accounting. So states with low property tax rates do not necessarily have low tax burdens overall.
In California, for example, state and local property taxes amount to just 0.7% of the total value of all occupied housing units in the state, far less than the 1.1% national figure. Still, California residents paid $5,237 per capita in taxes in fiscal 2012, which amounted to 11.0% of the average resident’s income that year — both figures some of the highest of any state. New Hampshire, which has the second highest property tax rate in the country, has one of the lowest overall tax burdens of any state.
Most states with low property tax rates compensate by levying taxes on other assets. While on average property tax is the largest source of state and local tax revenue nationwide, it is the primary source of state and local tax revenue in just 8 of the 32 states with effective property tax rates below the 1.1% national figure. In Hawaii, Alabama, and Louisiana — the states with the three lowest property tax rates — sales taxes comprise the lion’s share of state and local tax revenues. In Utah and California, which also have some of the lower property tax rates of any state, individual income taxes are the primary source of state and local tax revenues.
When accounting for sales, income, and other taxes, just three of the states with the top 10 lowest property tax rates — South Carolina, Louisiana, and Wyoming — are also among the top 10 states with the lowest tax burdens overall.
According to the Tax Foundation, urban areas often have the largest tax burdens.
The three states with the highest tax burdens overall are New York, Connecticut, and New Jersey — which are some of the most urban states in the country.
To determine the states with the highest and lowest property taxes, 24/7 Wall St. reviewed the effective property tax rate for the 2015 calendar year for all 50 states with data from the Tax Foundation. The effective property tax rate is the total amount of real property taxes paid in 2015 as a percentage of 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 state and local tax collections per capita for fiscal 2012, state and local tax collections per capita as a share of income for fiscal 2012, and the source of tax collections by tax type for fiscal 2014 also came from the Tax Foundation. Data on median home value and median household income are for 2016 and came from the U.S. Census Bureau’s American Community Survey. All data are for the most recent period available.