The highest property taxes in 2016 were paid by homeowners New Jersey, and the lowest were in Alabama.  The difference between the two was impressive; $7,707.  Using the Census Bureau's 2016 American Community Survey, the National Association of Home Builders (NAHB) charts and tries to explain the distribution of real estate taxes (RET) nationwide.

The data shows that the distribution of RET was little changed in 2016 from the previous year.  The ten highest taxing states are found in the Northeast while the lowest bills are found, with the exception of Texas, in the South. New Jersey property owners paid an average of $8,374 in taxes last year, widening its gap with Alabama by $418.

Given the wide range of home prices or values nationwide, NAHB leveled the field by computing taxes at the state's rate per $1,000 of home value.  They divided total taxes collected by the total value of owner-occupied homes within the state.  Thus, they arrived at New Jersey as having the highest effective rate in the nation, 2.14 percent or $21.40 per $1,000 of value, and Hawaii having the lowest rate, 0.29 percent of $2.94 per thousand. Despite its low rate, Hawaii ranks 28th in the actual taxes per homeowner because it has the highest average home prices in the country. Although Alabama owner occupants pay the lowest average payment, $667 per year, its rate is higher than many at 0.38 percent.


While property values play a role in the variation in tax bills, there are some states where home values seem divorced from taxes.  NAHB cites Texas as an example; ranking 30th in average home values but 11th among states in average taxes paid. This is because Texas relies heavily on property taxes to run its government.

Nationwide, RET account for 40 percent of state and local tax receipts, the remainder coming from a mix of income, corporate, and sales taxes. Texas, however, does not have an income tax.  Even though the per capita cost to run the state is the 11th lowest in the county, the money has to come from somewhere, and while the state makes up for its lack of individual income tax by taxing corporations, local government entities levy the 7th highest effective property taxes in the country, 1.62 percent on average.

New Hampshire is in a similar position. The state has no income nor sales tax, but its property tax rate is only slightly below that of New Jersey at 1.94 percent.  This gives the average Granite State homeowner an annual property tax bill of $5,511.

NAHB's David Logan, who wrote the analysis for the association's Eye on Housing blog concludes that neither home values nor a state's reliance on property tax revenue provide a full explanation for the geographic variance of property tax rates and revenues. "State spending per resident, the nature of this government spending, the prevalence of homeownership within a state, and demographics all affect tax policy and, thus, the type and magnitude of tax collections. These variables combine to explain the variance that the two factors discussed here do not fully capture."