Variation in property taxes depends on more than geography
The highest property taxes in 2016 were paid by New Jersey homeowners, and the lowest were in Alabama. The difference between the two was impressive; $7,707. Using the Census Bureau’s 2016 American Community Survey, the National Association of Home Builders (NAHB) charts and attempts to explain the breakdown of property taxes (RETs) nationwide.
The data show that the distribution of RET was little changed in 2016 compared to the previous year. The ten highest-taxed states are in the northeast while the lowest bills are, with the exception of Texas, in the south. New Jersey homeowners paid an average of $8,374 in taxes last year, widening its gap with Alabama by $418.
Given the wide range of home prices or values nationwide, NAHB leveled the ground calculating taxes at the state rate per $1,000 of home value. They divided the total taxes collected by the total value of owner-occupied homes in the state. So they arrived at New Jersey as having the highest effective rate in the country, 2.14% or $21.40 per $1,000 of value, and Hawaii having the lowest rate, 0.29% of 2 $.94 per thousand. Despite its low rate, Hawaii ranks 28th in actual taxes per homeowner because it has the highest average home prices in the country. Although Alabama homeowners pay the lowest average payment, $667 per year, its rate is higher than many at 0.38%.
Although property values play a role in varying tax bills, there are some states where home values appear separate from taxes. NAHB cites Texas as an example; ranking 30th in average home value, but 11th among states in average taxes paid. Indeed, Texas relies heavily on property taxes to lead his government.
Nationally, RETs account for 40% of state and local tax revenue, with the rest coming from a mix of income, corporate and sales taxes. Texas, however, has no income tax. Even though the per capita cost to run the state is the 11th lowest in the county, the money has to come from somewhere, and while the state makes up for its lack of personal income taxes by taxing corporations, local government entities levy the 7th highest. effective property taxes in the country, 1.62% on average.
New Hampshire is in a similar position. The state has no income or sales tax, but its property tax rate is only slightly lower than New Jersey’s at 1.94%. That gives the average Granite State homeowner an annual property tax bill of $5,511.
NAHB’s David Logan, who wrote the analysis for the association Look at housing The blog concludes that neither home values nor a state’s reliance on property tax revenues provide a complete explanation for the geographic variance in property tax rates and revenues. “State spending per capita, the nature of that government spending, the prevalence of homeownership in a state, and demographics all affect tax policy and, therefore, the type and magnitude of collections. These variables combine to explain variance that the two factors discussed here do not fully capture.”