How Your Property Taxes Compare and Other Surprising Facts

No matter where you call home, chances are you’re paying property taxes to the city, the county, the school district, the state, or even all of these. Property taxes may be pervasive (and some would say invasive) but they’re not all are alike.

The property tax you pay can be a completely different amount than the tax your neighbor pays, thanks to property tax exemptions — discounts given to a particular group, like seniors, people with disabilities, or veterans.

The total property tax tab some homeowners pay would make you gasp, either because you can’t believe how much they pay — or how little. Take New Jersey. Homeowners there pay three and a half times more than the nation’s $2,075 median property tax, and 13 times more than the typical Alabama homeowner.

Highest and Lowest Property Taxes by State

Source: U.S. Census Bureau’s American Community Survey, 2012

How much can exemptions reduce a property tax bill? In some places, the exemptions are so generous that homeowners pay some of the lowest property taxes around, according to a property tax study from think tank Lincoln Institute of Policy:

• Honolulu homeowners, who have the highest median home prices of any state, also pay the lowest property taxes among big cities. They don’t owe property taxes on the first $80,000 of their home value.

• Washington, D.C., exempts $69,100.

• For 2014, Boston offered a $126,095  property tax exemption.

Some Homeowners Pay High Taxes Even Though They Have Relatively Low Home Values

And vice versa. 

Filter property taxes through the lens of housing values (which make a nice stand-in for cost of living) and you realize high home values don’t always lead to high property taxes.

Comparatively speaking, property taxes are highest in the Midwest, where home values are relatively low, according to a Brookings Institution 2014 analysis. Higher home prices on the West Coast, meanwhile, make the relative tax burden there seem small.

States with Little or No Income Tax May Charge Higher Rates of Property Taxes

Generally, states that have little or no income tax charge property taxes 8% to 12% above the national average, according to the Center for Budget and Policy Priorities.

States with little or no income tax:

• Alaska

• Florida

• Nevada

• New Hampshire*

• South Dakota

• Tennessee**

• Texas

• Washington

• Wyoming

* New Hampshire only collects income tax on qualifying investment, dividend, and interest income.

** Tennessee imposes an income tax on those receiving interest from bonds, notes, stock dividends.

So you’d think states with high property taxes would have low income tax rates. Not always: California and Illinois have high income tax and high property tax burdens, the CBPP says. Every jurisdiction is different and the pattern doesn’t always work out in your favor.

So Maybe Your State Really Needs Your Property Tax Money

States charge taxes because they need money to pave roads, fund schools, and pay state troopers. Some states fund more of their budgets via property tax than others.

If you live in Arkansas, your property taxes are a scant 18.3% of the revenue the state takes in from all taxes. In Texas, property taxes generate nearly half (45.2%) of state tax revenues. 

Remember, your property taxes are deductible.

You may not be happy about paying property tax but you can lessen your pain by deducting property taxes on your federal income taxes (if you itemize). Otherwise, you can always vote to put someone else in charge of setting your property tax rates during the next election.

Or move to the Cayman Islands.

Grand Cayman in the Cayman Islands has no property tax and there are about 200 homes for sale that cost $200,000 or less.

Dona DeZube has been writing about real estate for more than two decades. She lives in a suburban Baltimore Midcentury modest home on a 3-acre lot shared with possums, raccoons, foxes, a herd of deer, and her blue-tick hound.