As mortgage rates still linger around the 7 percent mark and home prices remain relatively high amidst a historic lack of inventory in the U.S., property taxes are a significant expense that homeowners must take into account when facing the growing cost of housing.
Read more: How to Calculate How Much House You Can Afford
Property tax rates, which are calculated based on the state’s or municipality’s tax rate and a homeowner’s property’s value, vary dramatically across states, as they do across counties.
All 50 states and the District of Columbia impose this type of tax, though some do so through local levies imposed by municipalities, townships, school districts and others—like Texas, which doesn’t have a state property tax but leaves to local taxing unit to create tax revenues to pay for local services like schools, streets and police and fire protection.
Read more: Find the Lowest Rates From Top Mortgage Lenders
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In addition to this internal variety in the U.S., property taxes regularly change in a state or county in a relatively small timeframe: the rates can be reassessed every year or every few years, according to local regulation.
All in all, this means that aspiring homebuyers in the U.S. must pay attention to several factors that might inflate their annual bills when shopping for a property—not only mortgage rates and prices, but also property taxes.
The situation isn’t exactly rosy for them at the moment. As of June 20, according to Freddie Mac, the 30-year-old fixed-rate mortgage—the most popular among American borrowers—was 6.87 percent. The 15-year-old fixed-rate mortgage, on the same date, was 6.13 percent.
Despite remaining significantly higher than the lows of 2020 and 2021, mortgage rates continued falling for the third straight week last week, giving observers hope that the Federal Reserve might soon decide to cut its key interest rate and consequently bring down mortgage rates.
Meanwhile, home prices at the national level are once again on the rise. As of May, according to Redfin’s latest data, the median sale price of a home in the U.S. was $439,716, up 5.1 percent compared to a year earlier.
The location of your home can make a huge difference. Here’s a map with the most expensive and cheapest property tax rates in the country, by state.
The states with the highest property tax rates last year were Illinois (1.88 percent), New Jersey (1.64 percent), Connecticut (1.54 percent), New York (1.46 percent) and Nebraska (1.46 percent). Those with the lowest property tax rates were Hawaii (0.31 percent), Arizona (0.41 percent), Alabama (0.42 percent), Delaware (0.43 percent) and Tennessee (0.44 percent).
Overall, the lowest rates were found in the South and the West, while the highest were concentrated in the Northwest and Midwest. Newsweek contacted ATTOM for comment by email.
These are the effective property tax rates for every state, in alphabetical order, for the tax year 2023, according to ATTOM Data Solutions and mentioned by Bankrate:
Alabama: 0.42 percent
Alaska: 0.95 percent
Arizona: 0.41 percent
Arkansas: 0.54 percent
California: 0.70 percent
Colorado: 0.48 percent
Connecticut: 1.54 percent
Delaware: 0.43 percent
District of Columbia: 0.69 percent
Florida: 0.76 percent
Georgia: 0.82 percent
Hawaii: 0.31 percent
Idaho: 0.44 percent
Illinois: 1.88 percent
Indiana: 0.86 percent
Iowa: 1.25 percent
Kansas: 1.26 percent
Kentucky: 0.76 percent
Louisiana: 0.62 percent
Maine: 0.82 percent
Maryland: 0.81 percent
Massachusetts: 0.98 percent
Michigan: 1.04 percent
Minnesota: 0.98 percent
Mississippi: 0.62 percent
Missouri: 0.85 percent
Montana: 0.85 percent
Nebraska: 1.46 percent
Nevada: 0.48 percent
New Hampshire: 1.25 percent
New Jersey: 1.64 percent
New Mexico: 0.62 percent
New York: 1.46 percent
North Carolina: 0.60 percent
North Dakota: 0.99 percent
Ohio: 1.37 percent
Oklahoma: 0.90 percent
Oregon: 0.83 percent
Pennsylvania: 1.33 percent
Rhode Island : 1.01 percent
South Carolina: 0.50 percent
South Dakota: 1.01 percent
Tennessee: 0.44 percent
Texas: 1.20 percent
Utah: 0.45 percent
Vermont 1.29 percent
Virginia 0.76 percent
Washington 0.80 percent
West Virginia 0.49 percent
Wisconsin 1.12 percent
Wyoming 0.53 percent
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
