Homeowners need to budget for additional expenses aside from their mortgage payments, such as property taxes. These taxes support public services and institutions like schools, transportation infrastructure and maintenance, telecommunications, and safety measures in the local area, county, or state.
The primary source for property tax assessments is real estate, although some states may also tax other personal assets such as cars.
The amount of property taxes you have to pay depends on the location of your property, and each state has a different starting point for property tax rates. Once you know your state’s property tax rate, you can research further to find out about the specific property tax for your area.
What are property taxes?
Your property tax amount is determined by the value of your home and the tax rates set by your local government. The specific amount you pay is based on your state and municipality, as well as the current value of your property.
The Tax Policy Center of the Urban Institute & Brookings Institution states that every state in the US and the District of Columbia have property tax requirements. However, it is worth noting that local levies mainly collect property tax revenue. These levies can be implemented by different government entities such as school districts, special districts, municipalities, townships, or counties.
The amount of property taxes you pay can change every year because they are reassessed annually. However, some cities or counties may only adjust their rates every few years. Contact your local assessor’s office to find out how often property tax calculations are done in your area.
Property taxes by state
The following table presents the average property taxes for each state (in alphabetical order) during the tax year 2022, as reported by ATTOM Data Solutions. It shows the yearly property tax for an average home in that state and also provides the property tax amount for ATTOM’s national median price in the first quarter of 2023, estimated to be around $321,000, for comparison purposes.
| State | Average State Tax Rate | Median Home Value | Annual Tax on Median Value Home in State | Annual Tax on Median Value Home in U.S. ($321,000) |
|---|---|---|---|---|
| Alabama | 0.37% | $275,255 | $1,022 | $1,188 |
| Alaska | 0.97% | $410,998 | $3,976 | $3,114 |
| Arizona | 0.39% | $570,326 | $2,220 | $1,252 |
| Arkansas | 0.53% | $213,319 | $1,228 | $1,701 |
| California | 0.66% | $976,661 | $6,492 | $2,119 |
| Colorado | 0.40% | $736,888 | $2,983 | $1,284 |
| Connecticut | 1.57% | $487,105 | $7,671 | $5,040 |
| Delaware | 0.48% | $391,360 | $1,892 | $1,541 |
| District of Columbia | 0.57% | $1,140,758 | $6,468 | $1,830 |
| Florida | 0.67% | $608,364 | $4,085 | $2,151 |
| Georgia | 0.70% | $387,979 | $2,720 | $2,247 |
| Hawaii | 0.30% | $1,196,336 | $3,539 | $963 |
| Idaho | 0.46% | $548,407 | $2,505 | $1,177 |
| Illinois | 1.78% | $304,352 | $5,424 | $5,714 |
| Indiana | 0.74% | $264,758 | $1,960 | $2,375 |
| Iowa | 1.25% | $235,117 | $2,934 | $4,012 |
| Kansas | 1.15% | $274,233 | $3,144 | $3,691 |
| Kentucky | 0.60% | $244,640 | $1,470 | $1,926 |
| Louisiana | 0.53% | $244,227 | $1,296 | $1,701 |
| Maine | 0.89% | $414,216 | $3,699 | $2,857 |
| Maryland | 0.76% | $559,764 | $4,265 | $2,440 |
| Massachusetts | 0.94% | $746,403 | $7,044 | $3,017 |
| Michigan | 1.06% | $276,421 | $2,923 | $3,403 |
| Minnesota | 0.90% | $381,989 | $3,455 | $2,889 |
| Mississippi | 0.55% | $238,896 | $1,311 | $1,765 |
| Missouri | 0.82% | $275,018 | $2,244 | $2,632 |
| Montana | 0.65% | $446,834 | $2,885 | $2,086 |
| Nebraska | 1.36% | $286,491 | $3,902 | $4,366 |
| Nevada | 0.44% | $572,254 | $2,521 | $1,412 |
| New Hampshire | 1.28% | $534,689 | $6,855 | $4,109 |
| New Jersey | 1.79% | $531,742 | $9,527 | $5,746 |
| New Mexico | 0.60% | $348,250 | $2,016 | $1,926 |
| New York | 1.26% | $530,822 | $6,673 | $4,045 |
| North Carolina | 0.52% | $404,847 | $2,096 | $1,669 |
| North Dakota | 0.90% | $299,164 | $2,679 | $2,889 |
| Ohio | 1.27% | $255,496 | $3,235 | $4,077 |
| Oklahoma | 0.76% | $231,880 | $1,757 | $2,440 |
| Oregon | 0.78% | $568,006 | $4,433 | $2,504 |
| Pennsylvania | 1.29% | $309,508 | $3,983 | $4,141 |
| Rhode Island | 1.01% | $563,490 | $5,693 | $3,242 |
| South Carolina | 0.46% | $389,249 | $1,782 | $1,477 |
| South Dakota | 1.03% | $310,129 | $3,197 | $3,306 |
| Tennessee | 0.42% | $392,613 | $1,659 | $1,348 |
| Texas | 1.25% | $387,083 | $4,822 | $4,012 |
| Utah | 0.44% | $682,163 | $2,982 | $1,412 |
| Vermont | 1.43% | $429,277 | $6,126 | $4,590 |
| Virginia | 0.72% | $463,386 | $3,322 | $2,311 |
| Washington | 0.70% | $757,449 | $5,275 | $2,247 |
| West Virginia | 0.47% | $197,656 | $928 | $1,509 |
| Wisconsin | 1.15% | $317,889 | $3,670 | $3,691 |
| Wyoming | 0.64% | $398,337 | $2,558 | $2,054 |
How are property taxes calculated?
Your property taxes are determined by the local tax rate and the assessed value of your property, which is usually lower than its fair market value and determined by your local assessor.
When determining your property tax, the assessor in your area will take into account your home’s condition, any major upgrades, such as a renovated kitchen or a pool, as well as the value of the land your home is situated on.
Why do property taxes vary?
The World Population Review reports that the average American household pays around $2,459 annually in property taxes. The exact amount varies based on the location and value of the home, resulting in a slightly different property tax rate for each individual.
According to ATTOM, property taxes for single-family homes in the U.S. increased by 3.6 percent in 2022. This was higher than the 1.6 percent increase in 2021, but lower than the 5.4 percent increase in the previous year. It is uncommon for property taxes to decrease, but there may be ways to lower them, which will be discussed below.
Do credit scores have any effect on property taxes?
In some states, credit scores can have an impact on property taxes. Local governments may use a person’s credit score to determine their eligibility for certain tax benefits or exemptions. For example, in California, homeowners with low credit scores are not eligible for the state’s homeowner’s exemption program, which grants them a reduction in their property taxes.
Who pays property taxes?
Paying property taxes is typically a standard cost for homeowners when purchasing and owning a home, but certain types of properties and individuals may be eligible for partial or full exemption from paying property taxes.
The National Association of Counties has a list of property tax exemptions organized by state, including exemptions for both the property owner and the property itself.
Homeowner exemptions
- Military service: The tax exemptions available to military members and veterans vary by state. However, disabled veterans and surviving spouses/children may qualify for extra exemptions.
- Senior citizens: Some states offer seniors over the age of 62 or 65 an exemption from paying property taxes. The age requirement varies by state.
- Widows and widowers: If you have lost your spouse and you are a homeowner, you should check if your state offers a partial property tax credit or exemption.
- Disabilities: Homeowners who are considered disabled by a U.S. government agency may be eligible for exemptions in many states.
- Income-based: Certain states and local areas provide exemptions from property taxes to individuals who meet the poverty guidelines or other income requirements.
Exemptions based on property type
- Homestead: If you own a primary residence and pay property tax, you might qualify for a homestead exemption. Usually, this exemption is applicable to seniors, but in some states, it also applies to veterans, disabled individuals, and various other groups. This exemption allows you to exclude a part of your home’s value from property taxes.
- Religious and nonprofit organizations: Whether or not a religious or nonprofit organization is exempt from property tax will depend on its organizational structure and local statutes. If you own the property and fall under these categories, you may be eligible for an exemption.
- Agricultural use: If you own land that is used for farming or agriculture, check if you are eligible for a property tax exemption. Note that this only applies to land and not to your home.
- Government property: Typically, properties owned by the government at the federal, state, or local level are not required to pay property taxes.
How can I reduce my property tax bill?
In addition to the exemptions mentioned, there are other methods you can use to lower your yearly property tax.
Contact your local property tax assessor’s office to inquire about the possibility of paying your property tax directly in one lump sum instead of through the escrow account on your mortgage, which is collected as a part of your monthly mortgage payment. This may entitle you to a discount.
You can request a reassessment of your property value if you believe it has decreased since the last time it was assessed for tax purposes, and you are due to pay property taxes again. This could result in a lower tax bill than you are currently paying. Additionally, you can request a reassessment if you think there may be a mistake in the calculation of your property taxes, such as incorrect information about the size of your property.
Bottom line
The amount of property taxes you owe is determined by where you live and the value of your property, which may fluctuate due to local levies and ballot measures. As your property value goes up, your taxes will also rise. To manage the impact on your budget, it’s essential to keep yourself updated on your tax rate, property value, and eligibility for exemptions.
