Home sales surged in the United States in the early months of the pandemic. From the first quarter of 2020 to the second, the homeownership rate in the U.S. climbed from 65.3% to 67.9% – the largest quarterly increase since record keeping began in the mid 1960s. And while owning a home offers several advantages over renting, it also comes with added expenses – not the least of which are property taxes.
Property taxes, specifically those on land and residential structures, are typically levied at the local level, by cities, counties, or school districts. State governments also often impose additional taxes on personal property such as cars or boats.
Typically used for funding public services such as schools, law enforcement, and infrastructure improvements, property taxes are the lifeblood of local communities across the United States. Nationwide, property taxes accounted for 32.2% of all state and local tax revenue in fiscal 2020, more than any other tax, including sales and income taxes. Depending on the state, property taxes account for anywhere from 16.8% to 64.0% of tax revenue. (Here is a look at the counties where families need to budget the most for taxes in every state.)
Exactly how much Americans pay each year in property taxes depends both on their local property tax rate and the value of their property. For example, if a single family home is valued at $200,000 in a given year and the local property tax rate is 1%, the property tax bill would come to $2,000.
Across the country, home values and property tax rates vary considerably, and in some parts of the country, Americans pay thousands of dollars more per year on average than in others. Using data from the Tax Foundation, an independent non-profit tax policy research organization, 24/7 Wall St. identified the states where people pay the most in property taxes. States are ranked by the effective property tax rate, or the average amount paid in property taxes as a share of property value in 2021.
Click here to see the states with the highest property taxes.
Click here for a detailed methodology.
Nationwide, the average effective property tax rate stands at 1.1%. But depending on the state, it could be as low as 0.32% or as high as 2.23%.
Lower rates do not necessarily mean a smaller tax bill, however. Hawaii, for example, has the lowest average property tax rate of any state at 0.32%. But, because Hawaii also has nation-leading home values, state and local property tax collections in Hawaii total about $1,556 per person, more than in 22 other states. In several states with the highest effective property tax rate, per capita property tax collections total well over $2,500 each year. (Here is a look at the most tax friendly states for the rich.)
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