New Jersey boasted the highest average real estate tax bill in 2021 with a total of $9,151 per homeowner as well as the highest effective tax rate (2.02%). On the opposite end of the spectrum were Hawaii, with an average effective tax rate of 0.28%, and Alabama, with an annual real estate tax bill of $815 in 2021, according to NAHB Eye on Housing.
While the Northeast is home to the highest property taxes in the U.S., southern states (excluding Texas) offer some of the lowest real estate tax bills for their resident homeowners. After accounting for 39.9% of state and local tax receipts in 2020 due to a broad decline in income tax revenue as a result of the pandemic, property taxes made up 36.2% of the total in 2021.
Interstate differences among home values explain some, but not all, of the variance in real estate tax bills across the country. Texas is an illustrative example of a state in which home values hardly, if at all, explain real estate tax bills faced by homeowners. While Texas ranks in the bottom half of states in terms of average home values, it is 11th in average real estate taxes paid. Other factors are clearly at play, and state and local government financing turns out to be a major one.
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