Property tax in the US varies from state to state, county to county, and city to city. Another aspect of property tax is that higher median payments tend to be concentrated in urban areas. For instance, median property taxes paid in New York County, Cook County in Chicago, and Miami-Dade County are almost two to three times higher than their state’s average. This happens due to above-average home prices in urban centers. New York State has a median house sale price of $491,000 compared to New York County’s median house sale price of $770,000. Property taxes are evaluated based on the percentage of home values. The places with higher housing prices have higher property taxes generally.
States have their own policies regarding taxes. Some states prefer to have higher income and sales taxes to balance out their revenue generation. While some states have high property taxes alongside high rates in other major tax categories such as New Jersey and Illinois.
Some states with the highest property taxes in the US also have the most expensive electricity in the US including New Hampshire, Connecticut, and Vermont, among others.
Housing Property Market in the US
Residential properties include single houses, apartments, mobile houses, condominiums, vacation homes, or similar properties. In 2021, average level of median property taxes paid across the US was $1,682. Hawaii had the lowest property tax rate of 0.32% and New Jersey had the highest property tax rate of 2.23%, as of 2021.
On October 20, Fortune shared that Morgan Stanley analysts changed their outlook for housing prices. Earlier in April 2023, analysts projected the housing property market to plunge and expected national home prices to drop to 4% in 2023. But analysts now expect housing prices to rise to 5% this year, followed by an increase in mortgage rates, hitting 8%. Mortgage rates have been at the highest level since 2000 and it has had a deep impact on the housing market.
The monthly payment on a median-priced home is almost up 27% over the past year, as per Morgan Stanley’s calculation. If the monthly payment is adjusted based on the current 8% mortgage rate, it would be nearly 38% higher over the same period. Morgan Stanley has serious reservations about the mortgage rate if it continues to stay at 8%. As per Morgan Stanley, “affordability deterioration would return to the most severe we have seen in decades, the 2022 experience notwithstanding.” Other financial institutions are also eyeing an increase in home prices. Goldman Sachs’ managing director, Roger Ashworth, expects home prices to rise by 1.8% by the end of 2023 and record a 3.5% increase by the end of 2024.
Companies Operating in Real Estate
Some of the biggest public companies operate in the states with the highest property taxes. Real Estate Investment Trusts (REITs) are major players in the property sector. Equity Residential (NYSE:EQR) is one of the leading REITs that invest in apartment communities in the US. Equity Residential (NYSE:EQR) is based in Chicago, Illinois, and has a presence across both East and West Coast markets. On October 31, the company posted its results for the third quarter of 2023. Equity Residential (NYSE:EQR) posted earnings per share of $0.45, beating EPS estimates by $0.05. The revenue for Q3 2023 was $724.07 million, up by 4.15% year over year. Equity Residential (NYSE:EQR) made strong progress across the East Coast. Here are some of the comments from the group's earnings call of Q3 2o23:
"The business continues to do well in most of our markets, with our East Coast markets outperforming our West Coast markets. New York, Boston and Washington, D.C., comprising a bit more than 40% of our net operating income are all having very good years and are meeting or exceeding our expectations.
Simon Property Group, Inc. (NYSE:SPG) is another top REIT that owns and operates shopping malls and retail properties in the US. The company has a significant presence in states with high property taxes such as Illinois and New York. On November 2, Simon Property Group, Inc. (NYSE:SPG) announced its new strategic partnership with Mercedes-Benz HPC North America LLC. Mercedes-Benz HPC NA is expanding its EV charging network across the US and Canada. With this new collaboration with Simon Property Group, Inc. (NYSE:SPG), Mercedes-Benz HPC NA will build charging hubs at 55 Simon Property Group, Inc. (NYSE:SPG) locations in the US.
D.R. Horton, Inc. (NYSE:DHI) is one of the biggest home construction companies by volume in the US. D.R. Horton, Inc. (NYSE:DHI) has a significant role in the housing construction segment. On November 7, D.R. Horton, Inc. (NYSE:DHI) posted its results for the fourth quarter of 2023. The homebuilder reported earnings per share of $4.45, surpassing EPS estimates by $1.06. D.R. Horton, Inc.'s (NYSE:DHI) revenue for the quarter was reported at $10.5 billion, outperforming estimates by $500 million. The company expects to continue with same momentum heading into 2024. D.R. Horton, Inc. (NYSE:DHI) has projected the revenue to range from $36 billion to $37 billion and home closings between 86,000 and 89,000 for the fiscal year 2024. Here is what the Chairman of the Board, Donald R. Horton said:
"Despite continued higher mortgage rates and inflationary pressures, our net sales orders increased 39% from the prior year quarter, as the supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable."
Now, let’s have a look at the 15 states with the highest property taxes in the US.
15 States With the Highest Property Taxes in the US
15 States With the Highest Property Taxes in the US
Our Methodology
To find data for the 15 states with the highest property taxes in the US, we consulted the Tax Foundation. The latest property tax data on Tax Foundation was available for 2021. We ranked the states in ascending order of their respective property tax rates. For the states with similar property tax rates, we ranked them based on their state and local property tax collections per capita. The state with the higher state and local property tax collections per capita was ranked higher.
15 States With the Highest Property Taxes in the US
15. Kansas
Property Tax (2021): 1.34%
Kansas’s property tax is the lowest among the 15 states with the highest property taxes in the US. The state and local property tax collections per capita in Kansas was $1,712, as of 2021.
Some of the top real estate stocks to buy according to hedge funds include Equity Residential (NYSE:EQR), Simon Property Group, Inc. (NYSE:SPG), and D.R. Horton, Inc. (NYSE:DHI).
14. Michigan
Property Tax (2021): 1.38%
Michigan has a property tax rate of 1.38% and ranks 14th on our list of the 15 states with the highest property taxes in the US. In 2021, Michigan’s state and local property tax collections per capita was $1,594.
13. Rhode Island
Property Tax (2021): 1.40%
Rhode Island is among the states with the highest property taxes in the US. Its median house sale price is one of the highest among all the states, which stands at $491,000, as of September 2023. Rhode Island’s state and local property tax collections per capita was $2,449 in 2021.
12. New York
Property Tax (2021): 1.40%
New York’s property tax is 1.40%, similar to Rhode Island but it had higher state and local property tax collections per capita. In 2021, New York’s state and local property tax collections per capita was $3,118.
11. Pennsylvania
Property Tax (2021): 1.49%
Pennsylvania has a property tax rate of 1.49% and ranks 11th on our list of the 15 states with the highest property taxes in the US. In 2021, Pennsylvania’s state and local property tax collections per capita was $1,644.
10. Iowa
Property Tax (2021): 1.52%
Iowa has a property tax rate of 1.52%. In 2021, the state and local property tax collections per capita was $1,806. Iowa ranks among the states with the highest property taxes in the US.
9. Ohio
Property Tax (2021): 1.59%
Ohio is among the states with the highest property taxes in the US. Ohio’s state and local property tax collections per capita was $1,458 in 2021.
8. Wisconsin
Property Tax (2021): 1.61%
Wisconsin has a property tax rate of 1.61%. In 2021, the state and local property tax collections per capita was $1,717. Wisconsin ranks among the states with the highest property taxes in the US.
7. Nebraska
Property Tax (2021): 1.63%
Nebraska has a property tax rate of 1.63% and ranks seventh on our list of the 15 states with the highest property taxes in the US. In 2021, Nebraska’s state and local property tax collections per capita was $2,088.
6. Texas
Property Tax (2021): 1.68%
Texas has a property tax rate of 1.68%. In 2021, the state and local property tax collections per capita was $2,216. Texas ranks among the states with the highest property taxes in the US.
Some of the top companies operating in the real estate sector in the US include D.R. Horton, Inc. (NYSE:DHI), Equity Residential (NYSE:EQR), and Simon Property Group, Inc. (NYSE:SPG).
