Property taxes are something like a hidden fee on homeownership. You don’t always see them, but they’re there, quietly accumulating in the background until the county sends you a tax bill.
Without them, state and local governments would have much less cash on hand. In fact, property taxes account for roughly one-third of all state and local tax collections in the United States, according to the Tax Foundation. That makes property taxes the largest source of state and local tax collections.
In order to find out who has the tax liability on home and other real estate, WalletHub analyzed data from the U.S. Census Bureau for all 50 states and the District of Columbia. The personal finance website also used the rates to obtain the dollar amount paid in real estate taxes on a median value home in each state. On average, American households spend $2,197 each year on property taxes.
Let’s take a closer look at the 15 states with the highest property taxes in 2018.
Effective real estate tax rate: 1.40%
Kansas ranks as the No. 15 worst state in America for property taxes. Residents can be thankful for a low cost of living that helps ease a high effective rate on real estate.
Overall, Kansas has a median home value of only $135,300, resulting in a $1,890 tax bill. By comparison, neighboring Colorado only has an effective real estate tax rate of 0.60%.
Next: In Iowa, you get affordable homes but rather steep tax rates.
Effective real estate tax rate: 1.5%
The Hawkeye State ranks at No. 14 among worst for property taxes. Once again, a low cost of living means it could have been much worse. Iowa has one of the lowest median home values in the nation at $132,800. WalletHub found residents can expect to pay $1,986 in property taxes with that home value.
Next: Keystone State property tax rates are common — if not low — for the Northeast.
Effective real estate tax rate: 1.55%
The Northeast is no stranger to expensive living. Pennsylvania is one of many states in the region that ranks poorly for property taxes. A state median home value of $167,700 translates into a tax bill of $2,603. Unless Keystone State residents are willing to move to West Virginia (0.59%) or Delaware (0.55%), high property taxes will be a fact of life.
Next: To the west of Pennsylvania, residents find a higher rate but a lower median home value.
Effective real estate tax rate: 1.56%
Ohio ranks as the No. 12 worst state for property taxes. Here, one saving grace is a median home value of only $131,900, which results in a tax bill of $2,064.
On the positive front, Ohio doesn’t have vehicle property taxes. Meanwhile, neighboring states Indiana, Kentucky, and West Virginia all offer lower rates on real estate property for people willing to move.
Next: New York income taxes are the worst, but property taxes come close.
11. New York
Effective real estate tax rate: 1.65%
You knew New York would end up on the list somewhere: It’s the state with the heaviest overall tax burden in America. While an effective tax rate of 1.65% doesn’t seem terrible, keep in mind that New York has some of the priciest real estate in America.
The state’s median home value is $286,300, resulting in a $4,738 tax bill, according to WalletHub. That’s the fourth highest bill in this year’s rankings.
Next: The Ocean State just about matches New York.
10. Rhode Island
Effective real estate tax rate: 1.65%
Though Rhode Island is America’s smallest state, it hands out one of the nation’s largest property tax bills. A median home value of $238,200 here will run you $3,929 in taxes. Adding insult to injury, Rhode Island also features the highest vehicle property taxes (4.77%) in America.
Next: A lower median home value might soften the blow of Michigan’s high tax rate.
Effective real estate tax rate: 1.71%
Michigan ranks as the No. 9 worst state for property taxes. While the state has a high (1.71%) effective tax rate, many people would like to have its affordable housing options that help keep overall tax bills under control. Michigan’s median home value of $127,800 results in a $2,185 tax bill.
Next: Vermont’s high property tax rates are in line with most of New England.
Effective real estate tax rate: 1.78%
Vermont may be a little cheaper than some neighbors in the Northeast, but not by much. The state’s median home value of $218,900 leads to a tax bill of $3,893, with no relief available in surrounding states. One positive note here: Homeowners can take pleasure in not having to pay vehicle property taxes.
Next: Warren Buffett can afford the property taxes here.
Effective real estate tax rate: 1.83%
The home of Warren Buffett ranks as the No. 7 worst state in America for property taxes. If Nebraska’s effective real estate tax rate was applied to the national median home value ($185,000), the tax bill would total just $3,371.
Instead, residents can expect to pay an average of $2,506 in property taxes since the Nebraska median home values ($137,300) is significantly lower.
Next: You won’t pay income tax in Texas, but property taxes are among the highest.
Effective real estate tax rate: 1.86%
Yes, everything is bigger in Texas, and that includes property tax rates. Texas has a higher effective real estate rate than most of the country, but the median home value sits fairly low at $142,700. That results in a bill of $2,654 — not so scary compared to many of the states on this list.
Next: The only saving grace in Wisconsin is the low median home value.
Effective real estate tax rate: 1.95%
Wisconsin ranks as the No. 5 worst state for property taxes. With the median home value sitting at $167,000, the typical tax bill comes to $3,257, according to WalletHub. Neighboring states don’t fare much better, as Minnesota, Iowa, Michigan, and Illinois all rank worse than average.
Next: The first of four states with property taxes exceeding 2%
Effective real estate tax rate: 2.02%
Connecticut is one of four states with an effective real estate tax rate above 2%. However, with a state median home value of $270,000, the tax bill comes in awfully high at $5,327. That’s the third highest bill you can get for real estate in America.
Next: Small state, big property taxes
3. New Hampshire
Effective real estate tax rate: 2.19%
The Northeast strikes again, with New Hampshire ranking as the No. 3 worst state for property taxes. The small state has a median home value of $239,700, resulting in a typical tax bill of $5,241. The lesson here is, make sure your budget can truly handle a home in the Northeast if you plan to settle here.
Next: The highest property taxes outside of the East Coast
Effective real estate tax rate: 2.32%
It doesn’t get much worse than property taxes in Illinois, which took No. 2 in WalletHub’s 2018 rankings. Despite the high effective real estate tax rate, the typical bill of $4,058 could be worse. (Thank the state median home value of $174,800 for that.) The lowest-ranking neighbor state is Kentucky, which sits way down on the list with a 0.85% rate.
Next: No state can top New Jersey’s steep rate.
1. New Jersey
Effective real estate tax rate: 2.4%
New Jersey ranks as the worst state in America for real estate property taxes. With a rate of 2.4% and a median home value of $316,400, New Jersey completely exploded the range of tax bills, which elsewhere do not exceed $5,500.
WalletHub found the typical Jersey tax bill at a whopping $7,601 — nearly 14 times the amount residents might pay in Alabama, the lowest state on the list.
Additional reporting by Eric Schaal
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