This is a sensible matter, but we have to talk about it: it’s the property taxes. We both hate them, but they’re unavoidable, and are also a crucial source of revenue for local governments in the United States. They are collected annually from property owners, based on the assessed value of their real estate. The taxes are used to fund a wide range of public services and infrastructure, including schools, roads, police and fire departments, and other municipal services.
Property taxes are levied based on the principle that property owners should pay a proportionate share of the cost of providing public services in their community. Although the amount of property tax can vary depending on the local jurisdiction, they are an essential part of funding local government and maintaining a strong, healthy community. A recent report released by WalletHub, a personal finance website, has shed light on property tax rates around the country. The report ranks all 50 states and Washington, D.C., based on how low their real estate property tax rates are. The findings of the report provide an interesting portrait of New England that highlights a divide between one half of the region’s states and the other.
The US Counties With the Lowest Real Estate Property Taxes
Real estate property tax rates have a direct impact on homeownership, property values, and residential mobility. Thus, understanding the real estate tax rates and how they vary from state to state is important for homeowners and potential buyers. In this article, we will examine the report’s key findings, including the ranking of the states and the reasons behind the variations in the tax rates.
The report reveals that Hawaii has the lowest real estate property tax rate in the country, with an effective rate of just 0.29%. Alabama and Colorado follow closely behind with rates of 0.41% and 0.51%, respectively. On the other hand, Illinois, New Jersey, and Connecticut have the highest real estate property tax rates in the country. Connecticut was ranked 49th on the list, with an effective real estate tax rate of 2.15%, while New Hampshire was ranked 48th and Vermont 47th.
The New England Region and Its Real Estate Property Tax Rates
Three of the New England states, Massachusetts, Maine, and Rhode Island, fell somewhere in the middle of the rankings. Massachusetts has the 33rd-lowest real estate property tax rate in the country, with an effective rate of 1.20%. Maine and Rhode Island have similar rates, coming in at numbers 36 and 39 on the rankings, respectively. Connecticut, on the other hand, has the third-highest real estate property tax rate in the country, with an effective rate of 2.15%. Only Illinois and New Jersey have higher rates, according to the report. New Hampshire was ranked 48th, and Vermont was ranked 47th.
As the report shows, property taxes can affect people disproportionately. Property taxes can operate regressively when two individuals have disparate incomes but live in similarly valued homes. This unfairness particularly hits retirees who have lived in their houses for decades. Property values frequently increase at a higher rate than personal incomes, leading to high tax burdens on families with fixed incomes. This impact is a point to consider when moving, especially for those who are sensitive to price.
The report also shows that real estate property tax rates have varied from state to state since 2010. WalletHub tracked how property real estate tax rates have changed state-by-state. Their data shows rates in Massachusetts and Maine remaining relatively unchanged while rates increased in Vermont, New Hampshire, and Connecticut. As part of the report, WalletHub tracked how political affiliations impact property taxes. The report indicates that red states tend to impose lower real estate property taxes than blue states. States were designated as red or blue based on how their residents voted in the 2020 Presidential Election.