Property Taxes Are the Expense That Homebuyers Forget About. Here’s What They Cost in Every State

published Feb 25, 2021
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When I owned my home, my property taxes were rolled into my mortgage; I never had to think about them. But others who didn’t have the same terms had to pay theirs separately — and forgetting to save for them was pretty costly come tax time. In both cases, property taxes took up a good chunk of housing costs. It’s probably more than most people realize until they’re smacked with a big bill or go to take a look at their mortgage breakdown.

On average, property taxes in the United States cost homeowners $2,471 annually. That number varies greatly based on where you are in the country, though most people looking to buy a home neglect to factor in the cost. A new report from WalletHub broke down how much property taxes cost in every state this year.

“Consideration of property tax is not the most exciting part of the home buying process, but it is incredibly important and should always be considered,” Natasha N. Varyani, associate professor of law at New England Law in Boston, told WalletHub. “Often it is overlooked because it is not included in the list price of real estate, and it is an obligation that will be attached to the property forever.”

WalletHub’s study analyzed just how much property taxes cost on average, and the numbers were a bit surprising. Based on a median home value of $217,500 in the United States, New Jersey residents are paying the most in property taxes: a whopping $5,419 annually. Illinois landed the second most expensive spot, at $4,942 annually. Meanwhile, states like Hawaii and Alabama pay about nine times less than those in the highest spots. Hawaii pays the least, at $606 in annual property taxes, and second-to-last is Alabama, at $895 annually.

In general, WalletHub found that property taxes tend to be lower in red states, where residents can expect to pay on average $2,076, while those in blue states can expect to pay $2,722. That’s roughly a 30 percent difference.

And don’t think you’re safe from these costs because you rent. ”Keep in mind that renters also bear the burden of property taxes, as higher property taxes are typically passed along in the form of higher rents,” Laura Wheeler, associate director at the Center for State and Local Finance at Georgia State University, told WalletHub.

In order to arrive at the numbers in the study, WalletHub divided the median property tax payment by the median home price in each state, then applied those rates to a home worth $217,500. See the full breakdown and where your state ranks here.