Looking Back at Property Taxes by State in 2022: A Nationwide Analysis

In 2022, the National Association of Home Builders (NAHB) conducted a comprehensive analysis of property taxes across the United States, shedding light on some staggering disparities. New Jersey leads the nation with the highest average annual real estate tax bill, standing at a hefty $9,285, which is a striking $8,425 more than what homeowners in Alabama pay. The size of this disparity has been growing, increasing by 1.1% in 2022 and a notable 9.3% since 2017.

The map provided in the article illustrates the concentration of high average property tax bills primarily in the Northeast and on the West Coast. On the flip side, homeowners in Southern states (excluding Texas) enjoy some of the lowest property tax bills in the country.

However, to provide a more instructive state-by-state comparison, the NAHB takes into account the variance in property values. This is calculated by dividing aggregate real estate taxes paid by the aggregate value of owner-occupied housing units within a state, resulting in an effective tax rate that can be expressed either as a percentage of home value or as a dollar amount levied per $1,000 of this value.

New Jersey also stands out with the highest effective property tax rate, coming in at 1.85% or $18.52 per $1,000 of home value. Illinois is a close second at 1.84%. On the other end of the spectrum, Hawaii boasts the lowest average rate in the nation, a mere 0.27% or $2.68 per $1,000 of value. Yet, Hawaii's high home values place it in the middle of the pack regarding per-homeowner property tax bills.

The composition of the top 10 states with the highest property tax bills and rates has remained relatively consistent since 2017, with some minor shifts. Interestingly, Wisconsin dropped from the 6th-highest rate in 2021 to the 10th-highest in 2022.

The article also delves into the factors that contribute to these disparities, highlighting that home values are not the sole determinant of real estate tax bills. State spending per resident, government spending nature, homeownership prevalence, and demographics all play crucial roles in shaping tax policy and, consequently, the type and magnitude of tax collections. The geographic variance in property tax rates and revenues is a complex interplay of these various factors, offering a nuanced understanding of property taxes across the United States.

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