In the last presidential election, the idea of a wealth tax was bandied about. Residential property taxes are, in a way, a type of wealth tax— a house is an asset and the value of one’s equity is part of an individual’s net worth, and property taxes are a set percent of a home’s value.
Even if you pay off your mortgage, you’re never free from property taxes or the possibility of losing the home due to delinquent taxes.
The average American household spends $2,471 on property taxes for their homes each year, according to the U.S. Census Bureau. Home buyers often overlook property taxes when house hunting, because it is not included in the list price of real estate, says Natasha N. Varyani, an associate professor of law at New England Law in Boston. “It is a regular obligation that will exist forever and can be quite substantial,” she says.
If you rent and think you don’t have to worry about property taxes, rest assured they are factored into the cost of your rent.
To determine the states with the highest and lowest property taxes, personal finance site WalletHub compared all 50 states and the District of Columbia, using U.S. Census Bureau data.
The “median real-estate tax payment” was divided by the “median home price” in each state. The resulting rates were then used to obtain the dollar amount paid as real-estate tax on a house worth $217,500, the median value for a home in the U.S. as of 2019, (the year of the most recent available data) according to the Census Bureau.
Surprisingly, one of the most expensive states to live has the lowest effective real-estate tax rate: Hawaii, at 0.28%. Meanwhile, folks in some of the eastern states will not be surprised to learn they pay the highest rates.
Based on WalletHub’s research, here are the property taxes by state, from lowest to highest.