Property taxes vary widely across the United States, and some states have higher rates than others. The U.S. Tax Foundation provides a breakdown of property tax rates for all 50 states and the District of Columbia.
In the United States, local governments pay property taxes on real estate. Property tax rates vary widely across states, counties, and cities, with some areas paying much higher property taxes than others.
The map below shows the average property tax rates in all 50 states.
Regarding real estate, one of the biggest expenses for homebuyers is paying their property taxes. Most people don’t realize that property taxes are often more expensive than mortgage payments.
Property taxes are a significant portion of your monthly payment. They can add up to much money over time, especially if you live in a high-tax state.
Property taxes vary widely from state to state and county to county. There are only a few states that do not have property taxes at all; however, there are several that have very low property taxes. Property taxes in one state might be higher than income taxes in another. This report will list the states with the lowest property tax rates in the U.S.
Property tax rates in the United States
It’s no secret that some of the wealthiest countries in the world have some of the lowest taxes. The U.S. is no exception, and the property tax system is a major contributor to income inequality.
While some states are known for having high property taxes, some of the lowest are wealthy. New Hampshire, for instance, has some of the lowest property taxes in the country.
The median income in New Hampshire is $72,000. That’s a far cry from the average household income of $75,000 in San Francisco.
New Hampshire’s property taxes are also relatively low. The average homeowner pays about $1,000 per year. Compare that to the $5,700 per year that the typical homeowner in San Francisco pays.
Property taxes in the states
Many factors can affect how much you pay in property taxes, including how much of a home you purchase, how much of a home you own, and your current market value.
Many people assume that the amount they pay in property taxes is fixed, but that’s not the case. If you own a home worth $1 million, you could end up paying anywhere from $20,000 to $100,000 in property taxes.
The table below shows the median property tax rates for 50 U.S. states.
Property taxes can range from 0% to $11,500, depending on the county, city, and state.
While you may think your property taxes are low, they can be much higher in other states. For example, if you bought a home in Florida that cost $150,000, you would be paying a property tax rate of approximately $3,500.
Even if you live in a high-tax area, there is no guarantee that you will get a home that is less expensive than the average.
How to save money on your property tax
You may be wondering how you can save money on your property tax. Well, the simple answer is to move.
If you live in a state with a low property tax, chances are you’ll find that you’ll save a significant amount of money in property tax payments if you move to a state with a high property tax.
If you live in a high-tax state and want to move to a lower-tax state, you’ll likely want to sell your house first. This way, you can take advantage of any capital gains from selling your home.
Selling your house in a low-tax state is also a great way to avoid increasing your taxes by selling your home in a high-tax state.
Property taxes in Alabama
Alabama is one of the states where property taxes are very high. The average Alabama homeowner is expected to pay over $1,700 annually.
In the state, counties are responsible for collecting and distributing property taxes. Each county has a board of supervisors, and each supervisor is tasked with setting property tax rates.
A recent report from the National Association of Counties (NACO) found that property tax revenues across the U.S. are down due to decreased sales and real estate activity. NACO found that property tax revenues are down 10 percent from the previous year.
Regarding property taxes, the higher a county’s median household income, thee lower its property tax rate. However, according to a study by the Federal Reserve Bank of St. Louis, property taxes are not necessarily correlated with local economic performance.
The same study found that median household income is not a good predictor of how many people work in a county. It also does not predict how many people move into a county.
I have frequently asked questions about Property Taxes.
Q: I’ve heard that the Property Tax is an income tax. Can I deduct my Property Tax from my Income Tax?
A: No. You cannot deduct it from your federal or state income tax.
Q: Do I still need to report this amount on my tax return?
A: Yes, you must report any amount of property taxes paid in the year.
Q: I have a friend who lives in one of those houses where the city doesn’t collect taxes. How does he pay the taxes?
A: If the city doesn’t collect taxes from your neighbor, it means that the property owner has to pay the taxes. In some states, the tax may be included in the rent. It also depends on the owner. Some owners are not required to pay taxes at all. This is why having an attorney handle any legal issues related to the property is so important.
Top myths about Property Taxes
- Property taxes are a form of theft.
- Property taxes should be used to fund local services.
- People who own property should pay their fair share.
Conclusion
There are many ways to save money on your taxes. Some are obvious, like making sure you pay your taxes on time and submitting all necessary forms. Other tax-saving tips are less intuitive.
For example, if you can afford to buy property, you may be able to deduct its value from your taxable income. You can remove your property taxes if you live in a state with a low property tax.
The listremove provides a comprehensive overview of all 50 states. The table includes information on average property taxes paid and how much tax savings a state can expect.
