Most adults in the United States strive to own their own homes and vehicles. However, this ownership comes at a price. Not only will you have an auto loan or mortgage, insurance, and repair costs, but you also have to pay property taxes.
Property taxes are paid to your state and contribute to the state’s revenue. This revenue is used for a variety of purposes, including building schools, repairing roads, and building other critical infrastructure. Property taxes are paid on an annual basis and the amount you pay varies by state.
According to the U.S. Census Bureau, the average household pays over $2,200 per year for their homes. Across the 27 states with property taxes on vehicles, the average paid is about $440 annually.
For this article, we are going to look at the median property tax rate of each state. This is calculated by dividing the median tax payment of each state by the median home price. Based on this data, the state with the highest median tax rate is New Jersey. As of 2019, the median tax rate in this state is 1.89%.
Many of the states in the U.S. have a median property tax rate of at least 1%. These states are: Wisconsin, Nebraska, Illinois, Connecticut, Michigan, Vermont, North Dakota, Ohio, Pennsylvania, Rhode Island, Iowa, Kansas, South Dakota, New York, Maine, Minnesota, Massachusetts, and Alaska.
Now, let’s take a look at the states with the lowest median property tax rates. Louisiana has the lowest at 0.18%. Hawaii has the second-lowest rate at 0.26%. Alabama come in third was a median rate of 0.33%.
While some states have very low property taxes – and in some states, no property taxes at all on vehicles – one thing to remember is that the state makes up this revenue in other ways. For example, a state with very low property tax rates may have higher sales tax or personal income tax in order for the state to generate necessary revenue.