State Property Taxes Continue to Highlight Differences Across the Country

Real estate taxes vary widely across states, both in terms of annual taxes paid as well as effective tax rates. In 2021, the difference between average real estate taxes (RETs) paid by New Jersey and Alabama home owners was $8,336. New Jersey continued its perennial distinction as having the highest average real estate tax bill per home owner ($9,151) as well as the highest effective tax rate (2.02%).

Hawaii (0.28%) and Alabama ($815) were at the other end of the spectrum, boasting the lowest average effective tax rate and annual real estate tax bill, respectively. The difference between the highest-taxed state (New Jersey) and lowest (Alabama) grew by $362 between 2019 and 2021, more than double the growth between 2017 and 2019 ($170).

The overall distribution has remained roughly unchanged since 2019, as the composition of the top ten remained the same except Washington replaced Texas as the state with the 10th-highest average real estate tax bills. The map below illustrates the concentration of high average property tax bills in the Northeast. In contrast, southern states (excluding Texas) boast some of the lowest real estate tax bills for their resident homeowners.

NAHB economist David Logan looks at the national picture and provides further analysis in this Eye on Housing blog post.