The Tax Foundation has a new chart out showing where each state is on the general property tax scale. Having the highest average property taxes, the worst states to live in are New Jersey, Illinois, and New Hampshire (in that order). The best are Hawaii, Alabama, and Louisiana.
The Tax Foundation says that New Jersey has the highest effective property tax rate at 2.38% and is followed closely by Illinois (2.32%), New Hampshire (2.15%), and Connecticut (1.98%). On the other end of the spectrum, Hawaii has the lowest effective rate at 0.28%, and is followed closely by Alabama (0.43%), Louisiana (0.51%), and Delaware (0.55%).
Now, obviously some communities are worse than others and these rankings average them out across the state.
States tax real property in a variety of ways: some impose a rate or a millage—the amount of tax per thousand dollars of value—on the fair market value of the property, while others impose it on some percentage (the assessment ratio) of the market value, yielding an assessed value.
Some states have equalization requirements, ensuring uniformity across the state. Sometimes caps limit the degree to which one’s property taxes can rise in a given year, and sometimes rate adjustments are mandated after assessments to ensure uniformity or maintenance of revenues. Abatements are often available to certain taxpayers, like veterans or senior citizens. And of course, property tax rates are set by political subdivisions at a variety of levels: not only by cities and counties, but often also by school boards, fire departments, and utility commissions.
Today’s map cuts through this clutter, presenting effective tax rates on owner-occupied housing. This is the average amount of residential property tax actually paid, expressed as a percentage of home value. Some states with high property taxes, like New Hampshire and Texas, rely heavily on property taxes in lieu of other major tax categories; others, like New Jersey and Illinois, impose high property taxes alongside high rates in the other major tax categories.
So, how well does your state do on property taxes?