When it comes to property taxes, Northern New Englanders get hit hard

Each year, the average American household spends $2,690 on real-estate property taxes plus another $444 for residents of the 26 states with vehicle property taxes. With such high costs, it's no surprise that more than $14 billion in property taxes go unpaid each year, according to the National Tax Lien Association.

In order to determine who pays the most relative to their state, the personal-finance website WalletHub today released its 2023's Property Taxes by State report, as well as expert commentary. The report compares home and vehicle taxes across the nation and features insights from a panel of experts.

Key Stats:

• Hawaii has the lowest real-estate tax, $700, which is 8.7 times lower than in New Jersey, the state with the highest at $6,057.
  
• Twenty-six states levy some form of vehicle property tax. Of those states, Louisiana has the lowest, $26, which is 40 times lower than in Virginia, the state with the highest at $1,039.
  
• Blue States have 30.18 percent higher real-estate property taxes, averaging $2,991, than Red States, averaging $2,297.

To view the full report and your state's rank, please visit:
https://wallethub.com/edu/states-with-the-highest-and-lowest-property-taxes/11585

Expert Commentary

Do people consider property taxes when deciding where to move? Should they?

"Property taxes are one of the myriad considerations when considering whether to move. People consider factors like price, proximity to work, school quality, government services, transportation, crime, parks, recreation, environmental quality, and walkability when looking at homes in different communities. When considering the local tax rate of a target jurisdiction, people should - and occasionally do - consider the value they are getting for their taxes. If higher taxes are coincident with better government services, property values are generally higher and communities are more livable. People considering relocating should consider whether lower taxes mean fewer transportation options and reduced government services. Generally, urban areas have higher taxes and more services, but the quality and availability vary widely between cities (and sometimes between neighborhoods)."
Timothy M. Harris - Visiting Assistant Professor, University of Maine School of Law

"People should consider property taxes when deciding where to move if for no other reason than to determine affordability. Differences in property taxes affect residential mobility patterns, so it seems the average person does consider property taxes. After all, people are sensitive to price, and the property tax is a visible cost of homeownership that funds generally desirable government services like education and public safety. If they have the opportunity, people are going to seek the biggest benefit for their property tax buck."
Alex Combs, Ph.D. - Assistant Professor, University of Georgia

Should nonprofits pay property taxes?

"This is actually a very interesting question. On the one hand, one can argue that nonprofits should pay property taxes because they enjoy at least some of the same services as everyone else who resides in the area where property taxes are levied. On the other hand, nonprofits often already operate on a very tight budget (although there are many nonprofits this is not the case for them), and making them pay property tax may lead to them leaving the area or completely shutting down. Perhaps the answer to this question is whether or not a state wishes to encourage nonprofits to operate within its borders or not."
Doron Narotzki , S.J.D. - Associate Professor; Director of the MTax Program, The University of Akron

"Many nonprofits are subject to paying property taxes, and some nonprofits make payments instead of property taxes. Property tax exemptions are determined at state and local levels of government, so the types of nonprofits eligible for exemption and the standards they must meet to qualify to vary across the US. The rationale for exemptions is that some nonprofits use their property to provide a public service for which there is demand and that the government does not sufficiently supply. Therefore, it can be argued that these exempt organizations already allocate their resources in a way that is consistent with the purpose of property taxes. However, nonprofits benefit from the services that property taxes fund, leading to the argument that nonprofits should pay at least a portion of the tax on their property. Exemptions for nonprofits increase the tax burden on taxpayers. Ultimately, it is for voters to decide whether their state or local government administers property tax exemptions for nonprofits in an acceptable way, and it is the responsibility of exempt nonprofits to demonstrate their value to the public."
Alex Combs, Ph.D. - Assistant Professor, University of Georgia

Should certain groups of people be exempt from property taxes or be taxed at a lower rate?

"I do believe people on fixed and low incomes should be provided some form of relief. Most forms of relief either cap the taxable value of property or tax rates. I advocate for this, particularly in states where there is an appeals process taken advantage of by private sector entities and wealthy individuals who can afford attorneys to get their taxes reduced. In many instances this shifts."
Michael D. Belsky - Managing Principal EKI Digital and Quant 16

"Every state has one or more property tax relief programs for certain groups of people, such as seniors, persons with disabilities, veterans, or low-income homeowners. Exemptions can reduce the regressivity in the property tax and help those on fixed incomes afford rising property values. One concern is whether exemptions reduce the provision of government services, especially for those the exemptions are intended to help. My research on this topic found no evidence that property tax exemptions in Kentucky meaningfully reduce education spending or test scores. This is consistent with similar studies in other states. Of course, there are numerous services that exemptions could impact, and the design of exemptions is highly variable across governments. Though a one-size-fits-all answer is unlikely, property tax exemptions appear to be an effective tool for increasing equity without introducing significantly counterproductive consequences."
Alex Combs, Ph.D. - Assistant Professor, University of Georgia