In a new analysis released last week, ATTOM property solutions found that homeowners are paying more property taxes on single-family homes, even as overall effective tax rates ticked down slightly, reaching their lowest level since 2016.
Americans paid $339.8 billion in property taxes on single-family homes in 2022, up 3.6% from the $328 billion doled out in 2021. The average annual tax paid in 2022 was $3,901, according to ATTOM.
At the same time, the average effective tax rate across the country sank from 0.86% to 0.83%. This was possibly due to the continued steep increases in home values, which outpaced tax increases despite a sagging real estate market, according to ATTOM.
“Property taxes continued their never-ending climb last year, with wide disparities continuing from one area of the country to another, connected to varying costs, services and tax bases. But, on balance, the latest increase nationwide again was modest,” said Rob Barber, chief executive officer at ATTOM, in a statement.
In 2020, the amount of taxes paid on single-family homes rose a staggering 5.4% as these properties saw values skyrocket. The ATTOM analysis notes that effective tax rates could easily reverse the current trend, if the housing market stays slow.
“This year, local governments and school systems will face even greater challenges keeping taxes in check, given rising inflation rates and a growing number of commercial properties that could be eligible for tax reductions after suffering a surge of vacancies during the pandemic,” Barber said.
Regionally
Average property taxes rose by more than the national increase of 65% of the 223 metro areas studied in the analysis. Most of those were in the West and South.
Seven of the top 10 highest taxed states were in the Northeast, which historically taxes property the heaviest, and also contains an outsized number of higher-priced homes.
New Jersey topped the list both for effective rate at 1.79%, and average taxes paid at $9,527 annually.
On the list of highest effective tax rates, Illinois came in second at 1.78% followed by Connecticut (1.57%), Vermont (1.43%) and Nebraska (1.36%) rounding out the top five, with New York ranking in at 9, with a 1.26% rate.
New York City, on the other hand, ranked at the top of metro areas, with average annual property taxes paid at $42,627. The highest effective tax rate was also in New York state, but it wasn’t the Big Apple. Rochester, New York, took the dubious honor of having the nation’s highest effective tax rate at 2.52%.
On the other side, states with low tax rates were spread all over the country. Hawaii boasted the lowest rate at 0.3% followed by Alabama (0.37%), Arizona (0.39%), Colorado (0.4%) and Tennessee (0.42%).
As far as states where homeowners pay the least taxes, the five lowest were all in the South. West Virginia was the cheapest at $928 annually, with Alabama ($1,022), Arkansas ($1,228), Louisiana ($1,296) and Mississippi ($1,311) all below average in how much taxes residents paid.
Alabama also boasted three metros with the lowest effective tax rates, with Daphne-Fairhope (0.29%), Montgomery (0.3%) and Tuscaloosa (0.32%) ranked in the bottom five.
