- Property taxes vary across state lines and may affect whether homeowners can afford to buy or even rent in a given area.
- A recent analysis by WalletHub determined that the average American pays $2,127 in property taxes per year.
- In 2016, the states with the highest property taxes are New Jersey, Illinois and New Hampshire. In comparison, Hawaii, Alabama and Louisiana have the lowest real estate tax rates.
For the average person deciding where to buy or rent a home, the process is far less romantic than throwing a dart at a map. A slew of factors make certain locales more or less attractive places to live — weather, culture and quality of schools to name a few — plus all those elements that demand you loosen your purse strings.
One often-overlooked piece of the moving puzzle is property taxes, a financial obligation that varies significantly across state lines.
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A recent analysis by WalletHub determined that the average American pays $2,127 in property taxes per year, a cost that’s either bundled directly into a mortgage payment or indirectly tacked on to the cost of rent. That’s a big budget chunk, which might explain in part why $11.8 billion in property taxes go unpaid each year, according to the National Tax Lien Association.
Using U.S. Census Bureau data, WalletHub identified a real estate tax rate (expressed as a percentage) as well as an annual property tax dollar value for each of the 50 states and the District of Columbia.
The tax rate was calculated by taking the median property tax payment and dividing it by each state’s median home price. The resulting rates, which ranged from 0.28 to 2.29 percent, were then applied to the median U.S. home price ($175,700) and the respective state’s median home value to determine the annual cost of real-estate taxes.
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Based on this analysis, here are the top 10 states with the highest real estate property taxes (the annual dollar amount listed is based on the national median home price):
1. New Jersey
Tax rate: 2.29 percent
Annual taxes: $4,029
2. Illinois
Tax rate: 2.25%
Annual taxes: $3,959
3. New Hampshire
Tax rate: 2.10 percent
Annual taxes: $3,698
4. Wisconsin
Tax rate: 1.97 percent
Annual taxes: $3,459
5. Texas
Tax rate: 1.93 percent
Annual taxes: $3,392
6. Connecticut
Tax rate: 1.91 percent
Annual taxes: $3,357
7. Nebraska
Tax rate: 1.88 percent
Annual taxes: $3,301
8. Michigan
Tax rate: 1.83 percent
Annual taxes: $3,220
9. Vermont
Tax rate: 1.72 percent
Annual taxes: $3,021
10. Rhode Island
Tax rate: 1.61 percent
Annual taxes: $2,829
Compared to New Jersey’s most expensive property tax levels, in Hawaii, the median home pays eight times less per year for a total of $489.
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Other states with low property taxes included Alabama, Louisiana and Delaware. The District of Columbia and South Carolina tied as the states with the fifth lowest annual property taxes at a rate of 0.57 percent.
