Property taxes are an inevitable part of homeownership in the United States, contributing to the cost of maintaining public services and infrastructure in each state. However, the amount of property tax varies significantly from state to state, and it is essential for homeowners to be aware of the financial implications before settling in a new location. This blog post highlights the top 10 highest property tax states in the US, based on the latest data available. The rankings take into account the average property tax rate, the median home value, and the resulting annual tax bill for homeowners. The post provides readers with important information about each state, including its tax policies and how they compare to the national average. Homeowners may be surprised to discover that some states they considered to be affordable have high property taxes, while others with high living costs have lower-than-average tax rates. The post aims to support homeowners in making informed decisions about where to buy or rent a property, based on their individual financial circumstances.

1. New Jersey

New Jersey ranks as one of the top 10 highest property tax states in the United States. According to recent data, New Jersey property owners pay an average of $8,767 annually in property taxes, making it one of the states with the highest property tax rates. The high property taxes in New Jersey are primarily due to the state’s high property values and the costs associated with providing essential public services such as education, healthcare, and infrastructure development. Furthermore, New Jersey’s property tax system is often criticized for being complex and confusing, with many residents feeling that they are not getting their money’s worth. Despite these challenges, New Jersey remains a desirable place to reside, boasting a strong economy, diverse communities, and desirable amenities for residents.

2. Illinois

Illinois ranks second on the list of the top 10 highest property tax states in the US. The state has an average effective property tax rate of 2.22%, which is well above the national average of 1.07%. Homeowners in Illinois pay some of the highest property taxes in the country due to the high cost of public services and the state’s pension crisis. Additionally, Illinois has some of the highest property taxes on commercial real estate, making it an expensive state for business owners. While property taxes vary by county in Illinois, homeowners can expect to pay a significant amount each year depending on the value of their property. This is an important consideration for those looking to own property in Illinois, as property taxes can greatly affect the overall cost of homeownership.

3. Texas

Texas is among the top 10 highest property tax states in the US, making it a state with a relatively high tax burden for homeowners. Homeowners in Texas pay an average property tax rate of 1.69%, which is higher than the national average of 1.08%. This means that for a house valued at $250,000, the homeowner in Texas would pay an average of $4,225 in property taxes annually. The state does not have a personal income tax, so property taxes are a crucial source of revenue for local governments. While property taxes in Texas are generally higher than the national average, they vary greatly depending on the location and the property’s value. Homeowners in urban areas typically have a higher property tax rate than in rural areas.

4. Pennsylvania

Pennsylvania ranks fourth on the list of top 10 highest property tax states in the US. Property taxes in Pennsylvania are typically assessed by county governments and are used to fund local schools, public safety, and other public services. In 2021, the median property tax rate in Pennsylvania was 1.53%, which is higher than the national average of 1.07%. Homeowners in Pennsylvania can benefit from the Homestead Exclusion, which allows a portion of the value of a homeowner’s primary residence to be excluded from property taxes. Despite this, Pennsylvania’s property tax rates remain higher than most states in the US. It is important for Pennsylvania homeowners to be aware of these rates and budget accordingly to avoid any surprises when it comes to paying property taxes.

5. Nebraska

Nebraska is known to be one of the states with the highest property tax rates in the United States, according to recent data from the Tax Foundation. Ranking at number five on the list, Nebraska has an effective property tax rate of 1.76%, which is higher than the national average of 1.07%. The state’s property tax is primarily used to fund local education and local government services such as public safety, road maintenance, and parks and recreation. Although Nebraska’s property tax rate may appear high, it is important to note that the state offers homestead exemptions to homeowners who qualify. These exemptions can help offset the high property tax rates for eligible individuals. Despite this, homeowners in Nebraska should be prepared to pay a large portion of their property’s value in taxes each year.

6. New York

New York is one of the highest property tax states in the US, making it a costly place to own a home. Ranking at number six on the list of top 10 highest property tax states, New York has an average statewide effective property tax rate of 1.69%. Property taxes in New York are based on the assessed value of the property and can vary significantly between counties and cities. The high property taxes in New York are reflective of the high cost of living across many parts of the state, particularly in the major metropolitan areas such as New York City. Homeowners in New York should be prepared to allocate a significant portion of their budget towards property taxes each year.

7. Wisconsin

Wisconsin ranks seventh among the highest property tax states in the US. Known for its dairy industry, the Badger State imposes an average property tax rate of 1.94%, which is significantly higher than the national average of 1.08%. Wisconsin’s property taxes are used to fund local governments, schools, and other essential services. The state also allows for different levels of property tax exemptions, depending on the type of property and its purpose. Despite its high property taxes, Wisconsin offers competitive home prices, a favorable job market, and a high quality of life.

8. Michigan

Michigan is included in the list of top 10 highest property tax states in the US, ranking number 8 according to recent data. This state levies property taxes based on the value of the property, which includes both land and improvements. The average effective property tax rate in Michigan is 1.71%, which is higher than the national average. This has caused some homeowners to struggle to keep up with their property tax bills, particularly those who live in areas with higher property values. Michigan does offer various tax relief programs for eligible homeowners, such as the Homestead Property Tax Credit, but it is important for homeowners to understand their options and plan accordingly.

9. Iowa

Iowa, ranking at number 9, is one of the highest property tax states in the US. While Iowa boasts a relatively low cost of living, property taxes can be a significant financial burden for homeowners. The state levies property taxes based on the value of the property, and the tax rate is determined by the county and local government. Homeowners in Iowa pay an average of $1,529 in property taxes annually, according to the Tax Foundation. The state’s property tax rates range from 0.94% to 2.36% of a home’s assessed value, depending on the location. Homeowners in Iowa can take advantage of property tax credits, such as the Homestead Credit, to help reduce their overall tax liability.

10. Minnesota

Minnesota ranks at number 10 in the list of top 10 highest property tax states in the US. According to recent statistics, the average property tax in Minnesota is $2,694 per year. The state follows a complex tax system which includes a general tax levy imposed by every local government unit. This levy is set by multiplying the tax rate by the total value of the properties in the local government unit’s jurisdiction. Additionally, Minnesota law requires that the taxes on any given property cannot be more than 3% of its market value. The revenue collected through the property tax system is primarily used to fund local government units including schools, parks, police forces, and other public services. While these high taxes can be challenging for Minnesota residents, it can help to maintain the state’s robust public service system, which is renowned for its quality and accessibility.

In conclusion, property tax is an important factor to consider when purchasing a home. The top 10 highest property tax states in the US may have higher taxes, but they also often have a higher quality of life, better schools, and other benefits that come with living in these states. It’s essential to research property tax rates in the area where you’re considering purchasing a property to avoid any unexpected expenses in the future. Ultimately, the decision to purchase a property in any of these states rests on personal preferences, priorities and circumstance.