The average property tax for a single-family home in 2020 jumped by 4.4% from 2019, and the total amount of property taxes levied on single-family homes in the U.S. in 2020 was up 5.4% according to a recently released report.
Property tax amounts per state run the gamut from a modest $570 a year in Alabama to an extreme $8,000 per year in New Jersey. Americans can see big differences in their home values, tax rates, and, in turn, the property taxes they pay each year depending on where they live. The typical US homeowner pays about $2,375 in property taxes, according to data from Wallethub.
While historically low interest rates have reduced some barriers for entry into homeownership, rising property taxes coupled with dismally small inventory could price some potential buyers out of the current, already volatile market.
No state is without a property tax, but some are more affordable than others. The lowest effective tax rates in 2020 were in Hawaii (0.37%), Alabama (0.44%), West Virginia (0.51%), Colorado (0.54%) and Utah (0.54%). On the other end of the spectrum, states with the highest effective property tax rates in 2020 remained New Jersey (2.2%), Illinois (2.18%), Texas (2.15%), Vermont (1.97%) and Connecticut (1.92%).
New Jersey had the highest average property tax on single-family homes, at $9,196, which is more than 10 times more than the average tax of $841 in Alabama, the state with the lowest average levy. Other states in the top five were Connecticut ($7,395), New York ($6,628), New Hampshire ($6,596) and Massachusetts ($6,514). Others in the bottom five were West Virginia ($849), Arkansas ($1,147), Tennessee ($1,202) and Mississippi ($1,241).
Among the 220 metro areas analyzed in the report, 55% saw average property taxes jump from 2019 to 2020 at more than the national figure of 4.41%. Those were Salt Lake City, Utah (up 11.4%); San Francisco, California (up 11.1%); San Jose, California (up 10.8%); Seattle, Washington (up 10.3%); and Atlanta, Georgia (up 10.2%). Other major markets posting an increase in average property taxes that were more than the national average included San Diego, California (up 10.2%); Tampa, Florida (up 10%); Denver, Colorado (up 9.9%); Raleigh, North Carolina (up 9.7%); and Columbus, Ohio (up 9.1%).
Agents can offer a few strategies to their homeowner clients who think their tax bill is too much. They can petition the local tax board for a reassessment. An area’s tax rates are set by law, but individual assessments are subjective. Property owners are allowed to appeal and negotiate. Another option for homeowners is to list their property for sale and move to an area with lower property taxes.
There are also several other ways to reduce property tax burdens, including through deductions, credits and exemptions available to homeowners, such as:
- The homestead exemption
- Aid for disabled veterans
- Senior citizen tax exemptions
- Disability exemptions
- Farm and grazing land tax exemptions