Property Taxes by State – 2021


Real estate taxes vary widely across states both in terms of annual taxes paid as well as effective tax rates. In 2021, the difference between average real estate taxes (RETs) paid by New Jersey and Alabama home owners was $8,336. New Jersey continued its perennial distinction as having the highest average real estate tax bill per home owner ($9,151) as well as the highest effective tax rate (2.02%). Hawaii (0.28%) and Alabama ($815) were at the other end of the spectrum, boasting the lowest average effective tax rate and annual real estate tax bill, respectively. The difference between the highest-taxed state (New Jersey) and lowest (Alabama) grew by $362 between 2019 and 2021, more than double the growth between 2017 and 2019 ($170). The overall distribution has remained roughly unchanged since 2019, as the composition of the top ten remained the same except Washington replaced Texas as the state with the 10th-highest average real estate tax bills. The map below illustrates the concentration of high average property tax bills in the Northeast. In contrast, southern states (excluding Texas) boast some of the lowest real estate tax bills for their resident homeowners. As property values vary widely by state, controlling for this variable produces a more instructive state-by-state comparison. In keeping with prior analyses, NAHB calculates this by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state. The effective tax rate can be expressed either as a percentage of home value or as a dollar amount levied per $1,000 of this value. The map below shows that New Jersey has the dubious distinction of imposing the highest effective property tax rate—2.02% or $20.22 per $1,000 of home value. Hawaii levies the lowest effective rate in the nation—0.28%, or $2.82 per $1,000 of value. However, this low rate combined with extremely high home values results in middle-of-the-pack per-homeowner property tax bills. Hawaii’s average owner-occupied home value ($822,187) is second only to California’s ($831,859) and is 61% higher than New York’s ($509,768). Interstate differences among home values explain some, but not all, of the variance in real estate tax bills across the country. Texas is an illustrative example of a state in which home values hardly, if at all, explain real estate tax bills faced by homeowners. While Texas ranks in the bottom half of states in terms of average home values, it is 11th in average real estate taxes paid. Other factors are clearly at play, and state and local government financing turns out to be a major one. Property taxes accounted for 36.2% of state and local tax receipts in 2021 after making up 39.9% of the total in 2020 due to a broad decline in income tax revenue as a result of the pandemic. However, some state and local governments rely more heavily on property taxes as a source of revenue than others. Texas serves as an excellent example once again. Unlike most states, Texas does not impose a state income tax on its residents.  Even though per capita government spending is tame compared with other states—14th-lowest in the country—Texas and its localities must still find a way to fund spending.  Local governments accomplish this by levying the sixth-highest average effective property tax rate (1.50%) in the country.  The state government partly makes up for foregone individual income tax revenue by imposing its corporate tax on revenue rather than income. Of course, neither home values nor a state’s reliance on property tax revenue is fully responsible for the geographic variance of property tax rates and revenues.  State spending per resident, the nature of this government spending, the prevalence of homeownership within a state, and demographics all affect tax policy and, thus, the type and magnitude of tax collections. These variables combine to explain the variance that the two factors discussed here do not fully capture. Related ‹ Downshift for the FedTags: Building Materials, cost of homeownership, effective tax rates, inflation, local government, property tax, property tax rates, property taxes, real estate taxes, residential real estate, state and local government, state and local taxes, taxes

Property Taxes by State – 20212022-12-15T08:23:06-06:00

What to Know About Property Taxes


No one wants to think about property taxes. But understanding your rights and responsibilities can ensure you pay no more than your fair share. Here are some aspects of property taxes to keep in mind: Your Tax Bill May Differ From Previous Owners’ and Current Neighbors’ Tax Bills You might try to gauge your future tax bill on what previous owners or current neighbors paid, but your bill could be significantly higher. Those others may qualify for exemptions you don’t meet, such as ones for homeowners aged 65 or older or homeowners who are disabled. Also, their property taxes may have been kept in check with a homestead exemption that provides a 10%-per-year cap on increases in the appraised value. Once ownership changes on the home, though, the assessed value may jump substantially. Make Sure You Apply for Exemptions and Special Uses Exemptions lower your taxable value. A lower taxable value means your tax bill will be lower than if you don’t have exemptions. But you have to apply for them. A house you use as your principal residence qualifies for a homestead exemption that reduces the taxable value of your property and caps the amount your taxable value can go up each year. There are exemptions for homeowners 65 or older, homeowners who are disabled, homeowners who are disabled veterans, and others. Some farm and ranch properties qualify to be appraised based on agricultural uses, which often is lower than the market value of the land. Think Your Appraisal is not Accurate? If you believe the appraisal district appraised your home incorrectly, you can protest. Many districts have an option to try to settle a protest informally prior to a formal hearing. If the formal hearing with the appraisal review board does not go your way, you may be able to appeal the decision to state district court, an independent arbitrator, or to the State Office of Administrative Hearings. Information about the property tax process, exemptions, and protests can be found on the Texas Comptroller’s website and on many county appraisal district websites. Texas REALTORS® works to fight for laws that make property taxes fairer and more transparent. To learn more about property taxes, visit

What to Know About Property Taxes2021-06-22T02:21:11-05:00

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