Living costs vary widely across the United States, making some states more appealing than others for those on a limited budget. When considering affordability, it’s also vital to account for local tax rates. For example, minimal income tax rates may help individuals stretch their funds further.
According to the U.S. Census Bureau data, the average effective property tax rate is the U.S. is 1.10%. However, in some states you could be paying almost double that! Property taxes depend on several aspects, including government budgets, local tax structures, and how much a state relies on the revenue generated by taxation.
This article looks at the states with the best and worst property taxes, with figures expressed as a percentage of a property’s assessed worth.
1. Worst Property Taxes – New Jersey
At 2.13%, New Jersey has the highest property taxes in the nation. To further make the state less appealing for those whose finances are tight, the median home cost is higher than the national average, the state’s overall cost of living is around 20% higher than the national norm and the income tax rate is 5.5% compared to the U.S. average of 4.6%.
People should probably have plenty of spare cash if they plan to move to the Garden State, particularly if they are buying a home.
2. Illinois
Illinois has a property tax rate of 1.97%. Those living in the Prairie State are also subject to higher income and sales tax rates than the U.S. average. On the plus side, the median home cost in Illinois is $241,700, compared to the national average of $338,100, and the overall cost of living is slightly lower than the countrywide average.
3. New Hampshire
Homeowners in New Hampshire are subject to the third-highest property taxes in the county, at 1.89%. Home costs are generally higher than in many places around the county, and living costs tend to be on the high side. However, silver linings include the lack of state sales tax and zero income tax levied on wages.
The state’s unemployment rate is almost half that of the national norm.
4. Vermont
Vermont is another New England high-charger when it comes to property taxes, with the state clawing 1.76% of a property’s value. Vermonters are also rather unlucky regarding state income tax, which is higher than the national average. On the plus side, unemployment rates are relatively low and the state is seeing slight growth in the job market.
5. Connecticut
Yet another New England state with high property taxes, Connecticut, requires homeowners to pay 1.73% of their property’s value in taxes. Real estate prices in the state tend to be higher than the national median, and renters can expect to pay more than in many other states.
Connecticut residents also lose when it comes to income tax, with a higher-than-average rate. That said, the median household income in the Constitution State is $83,500+ per year, while the U.S. average is around $69,000.
6. Texas
The property tax rate in Texas is 1.6%. The sales tax rate of 8% is also higher than the national average of 7.3%. On the flip side, Texans don’t pay any state income tax. Employment prospects are good, too, with an increase of more than 2% in the job market and projected substantial growth over forthcoming years. Statewide, the overall living cost is lower than the U.S. average.
7. Nebraska
Nebraska ranks number 7 on the list of states with the highest property taxes, with residents of the Cornhusker State forking out some 1.54% in taxes for their real estate. However, the median home cost is lower than in many other places across the country, and locals enjoy relatively low living costs.
8. Michigan
The state of Michigan levies property taxes of 1.53% on its residents (tied with Wisconsin). However, sales and income tax rates are slightly lower than average national figures. Housing costs are also generally significantly lower than the countrywide median. Median salaries are also lower-than-average, however, perhaps balancing out the state’s financial landscape.
9. Wisconsin
Tied with Michigan, Wisconsin has a property tax rate of 1.53%. While the Badger State throws its residents a bone with a lower-than-average sales tax, the state’s income tax rate is almost 2% higher than the national average. The cost of living is about 10% lower than the U.S. average, with marked savings on housing and transport.
10. Ohio
With a property tax rate of 1.52%, Ohio finishes the “ten worst” list just 1% lower. However, the median home cost of $197,000 is much, much lower than the national median of $338,100. Additionally, income taxes and living costs in Ohio are lower than the national norms.
Now, let’s find out which states have the lowest property taxes.
5. Lowest Property Taxes – Colorado
Counting backward, Colorado ranks fifth for the best property taxes in the United States. The Centennial State levies property taxes of just 0.52%.
4. Wyoming
As well as its appealingly low property tax rates of 0.51% (tied with Louisiana), Wyoming charges zero income tax and has lower-than-average sales taxes.
3. Louisiana
As with Wyoming, Louisiana’s state government doesn’t rely heavily on property taxes to generate revenue, charging just 0.51% of a home’s value.
2. Alabama
Alabama’s property tax rate is a shockingly low 0.37%. However, other tax rates run a bit on the high side.
1. Hawaii
And the winner for the state with the lowest property tax in the United States is Hawaii. The Aloha State taxes property owners a very low 0.31%.
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