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It Costs a Lot to Own in These Places

Gregory Bresiger

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Property taxes are part of the total tax bill that makes some places affordable and others tax hells

Maybe think twice about moving to another state and buying a home.

That’s because it could be one of the states in which property owners and renters pay a bundle.

New Jersey, followed by Illinois, New Hampshire, Vermont and Connecticut, are the five states with the highest property taxes, according to Tax Foundation and WalletHub reports.

Yet property taxes are just one part of measuring the tax climate of a state. Others used by tax survey groups include a state’s business climate and the total tax load. That can include many imposts.

“Depending on where you live, property taxes can be a small inconvenience or a major burden,” according to a WalletHub survey. “The average American household spends $2,471 on property taxes for their homes each year, according to the U.S. Census Bureau, and residents of the 27 states with vehicle property taxes shell out another $442.”

Where one lives can make a difference regardless of whether you own or rent, since owners off load some tax costs to renters.

An average home in Hawaii has a property tax of $1,715 while in New Jersey it is close to 400 percent higher, $8,362, according to WalletHub. Red States have nearly 30 percent lower property taxes than Blue States.

Some states, as measured by business climate and total spending indexes, consistently have high tax numbers, a tax experts say.

Indeed, New Jersey has the worst business climate, 50th, and also rates poorly in the total tax load, 49th, according to the Tax Foundation. Illinois rated poorly both in business climate and total tax load.

“New Jersey and Illinois are big tax states,” says Janelle Cammenga, a Tax Foundation analyst.

Neither Alyana Alfaro, New Jersey Governor Phil Murphy’s press secretary, nor Jordan Abudayyeh, press spokesperson for Illinois Governor J.B. Pritzker, responded to questions.

Cammenga says some other relatively high property tax states overall have low taxes because they have no state income or low or no state sale taxes. So sometimes there are seeming contradictions in these ratings.

Hawaii has the lowest property tax but is a high tax state in other areas such as business and sales taxes. The latter are high because Hawaii is a big tourist destination and people will often pay sales taxes without quibbling since they’re on holiday, Cammenga notes. Hawaii has the 43rd worst business climate, the Tax Foundation said.

Texas is a low tax state as measured by total tax load and business climate. Still, it was the sixth worst on property taxes, but fifth best on business, in part because it has no state income tax.

New Hampshire has the third highest property tax, according to WalletHub. However, “New Hampshire rated high on property taxes but they have no state income tax or state sales tax,” Cammenga said.

Jill Gonzalez, an analyst with WalletHub, said those considering relocating for lower costs should consider several factors.

“Property taxes are high in some states and low in others,” she says, “because some states rely more on other types of taxes.

California, despite its overall high tax/poor business climate status, is around the middle of the pack on property taxes (34th).


“California, has property tax limitations because of the Jarvis tax referendum of the 1970s,” Cammenga noted. She added Californians have an incentive in stay in their homes and enjoy the Jarvis discount. Once, they move to another house, much of the discount is lost.

Otherwise, on issues such as business climate and overall tax loads, California ranks near the worst in the nation, about as bad as New York and New Jersey, the surveys reported.

Looking to escape a taxing climate? Review property taxes but consider other things, an academic says.

“I think people do well to consider the tax-service bundle they receive from a community,” says Mark Skidmore, a Michigan State University economics professor.

“Some people prefer a higher level of public service and are willing to pay higher taxes for it. Others may not want high-level public services and thus prefer a lower tax environment,” he added. “Communities people tend to avoid are those with high taxes and low services.”

Some states can have “very high legacy costs such as significant obligations to pay public employee retiree pension and health promises. These communities have high taxes but cannot offer a competitive level of public services because of these legacy costs,” Skidmore said.

Adds Gonzalez, “People looking for a low tax climate should look not only at property taxes, but at income taxes as well as sales taxes.”

Finding the best situation depends on several factors, she says.

“It’s important to look at the big picture numbers such as business climate and total tax load, but one should also consider individual circumstances,” Gonzalez said.

“For example,” she noted, “high earners might be more attracted to states such as Nevada, North Dakota or Washington where there are no income taxes, while retirees would likely prefer to live in a state with a low property tax burden such as Alabama, Arkansas or Delaware.”