If you’re buying a home, property taxes have to be on your radar. Even once you’ve paid off your mortgage or never began with one, you’re on the hook for yearly property taxes and the rates vary greatly from state to state. But where do people pay the most? What do property taxes average in your city? Let’s get to it.

What’s a Property Tax, Again?

These are the fees real estate owners pay to the county (or other local authority). The terms “property tax” and “real estate tax” are used pretty interchangeably. These fees are based on the assessed value of your property and every county has slightly different ways of assessing them. If you have an impound account with your mortgage, your property taxes are split into monthly fees and added to your mortgage payment. Even once you’ve paid off your mortgage, an annual tax bill is mailed and depending on the state and county, the taxes are usually due in four increments (as is the case in Washoe County, AKA Reno, NV) or twice yearly as is the case in California (with the exception of a supplemental tax bill which comes the first year you buy and is a separate blog post). 

The median annual property tax paid in 2019, according to data from the U.S. Census Bureau, was $2,578, or 1.03% of home value. But that can skew up and down.

Property tax is a huge source of revenue for state and local governments, totaling $617 billion in 2019—a full 39% of government tax revenue. In fact, property tax revenues is miles ahead of the next biggest revenue source, bringing in $159 billion more than individual income taxes and often the no-income states (looking at you, Texas) make up for that with higher-than-average property taxes. 

Assessing Property Tax

Property tax rates vary dramatically depending where you live, but it can be helpful to compare across locations by calculating what’s known as an effective property tax rate. That number is reached by diving total property taxes paid by the aggregate value of homes in an area.

And with that equation, we can identify that the highest paid property taxes relative to home value are in New Jersey (2.42%) and Illinois (2.16%). Compare that to Hawaii (.40%) and Alabama (.28%).

Total amounts paid on property tax are depending on tax rates and home values, but residents living in states with high effective property tax rates usually end up forking over the most money, too. In New Jersey, the average homeowner paid out $8,432 in property taxes last year—the highest in the country.

Other large cities with the highest property tax rate include:

• Milwaukee, Wisoncin at 2.17%
• El Paso, Texas at 2.13%
• Fort Worth, Texas at 1.86%
• San Antonio, Texas at 1.85%
• Arlington, Texas at 1.75%
• Omaha, Nebraska at 1.71%

What about large cities with the lowest property tax rates?

• Colorado Springs, Colorado at .48%
• Denver, Colorado at .49%
• Mesa, Arizona at .57%
• San Francisco, California at .57%
• Phoenix, Arizona at .58%
• Washington, DC at .58%
• Boston, Massachusetts at .58%
• Las Vegas, Nevada at .59%

Reno ranks as a midsize city with a .53% effective property tax rate.

The Bottom Line

There are many factors to take into consideration when purchasing real estate. Property taxes and insurance rates, especially in flood and fire-prone areas, are two of the most important to consider aside from your purchase price and mortgage rate particularly as the latter are ongoing expenses. If you need help weighing your best options in the San Francisco Bay Area or Reno, Lake Tahoe, you know where to find me!