ATTOM has released its 2022 property tax analysis for 87 million U.S. single family homes, which shows that $339.8 billion in property taxes were levied on single-family homes in 2022, up 3.6 percent from $328 billion in 2021. The increase was more than double the 1.6 percent growth in 2021, although smaller than the 5.4 percent increase the prior year.
The report also shows that the average tax on single-family homes in the U.S. increased 3 percent in 2022, to $3,901, after rising 1.8 percent the previous year.
The latest average tax resulted in an effective tax rate nationwide of 0.83 percent. That was down slightly from 0.86 percent in 2021 to the lowest point since at least 2016.
The report analyzed property tax data collected from county tax assessor offices nationwide at the state, metro and county levels, along with estimated market values of single-family homes calculated using an automated valuation model (AVM). The effective tax rate was the average annual property tax expressed as a percentage of the average estimated market value of homes in each geographic area.
In 2022, effective rates continued to decline even as total taxes rose because home values went up faster than taxes yet again around the country last year. Despite a stall in the nation’s decade-long housing market boom in 2022, the average single-family home estimated value still rose 7.9 percent over the year. That surpassed the average tax increase, resulting in the small dip in effective rates.
The downward trend in effective rates could easily reverse if a drop in home values that began in the second half of last year and continues in 2023. Prices have started to decline amid mortgage rates that have doubled, high consumer price inflation and other forces that have cut into what home seekers can afford.
“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. “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.”
Highest effective property tax rates in New Jersey, Illinois, Connecticut, Vermont and Nebraska
States with the highest effective property tax rates in 2022 were New Jersey (1.79 percent), Illinois (1.78 percent), Connecticut (1.57 percent), Vermont (1.43 percent) and Nebraska (1.36 percent).
Other states in the top 10 for highest effective property tax rates were Pennsylvania (1.29 percent), New Hampshire (1.28 percent), Ohio (1.27 percent), New York (1.26 percent) and Iowa (1.25 percent).
Hawaii, Alabama, Arizona, Colorado and Tennessee have lowest effective rates
The lowest effective tax rates in 2022 were in Hawaii (0.30 percent), Alabama (0.37 percent), Arizona (0.39 percent), Colorado (0.40 percent) and Tennessee (0.42 percent).
Other states in the top 10 for lowest effective property tax rates last year were Utah (0.44 percent), Nevada (0.44 percent), Idaho (0.46 percent), South Carolina (0.46 percent) and West Virginia (0.47 percent).
Highest-tax states in Northeast, with averages up to 10 times higher than elsewhere
States in the Northeast region had seven of the 10 highest average property taxes in the U.S. in 2022. They were led by New Jersey, where the average single-family-home property tax of $9,527 in 2022 was more than 10 times the average of $928 in West Virginia, which had the nation’s smallest average levy. Others states in the top five last year were Connecticut ($7,671), Massachusetts ($7,044), New Hampshire ($6,855) and New York ($6,673).
The 10 states with the lowest average tax in 2022 were all in the South. Aside from West Virginia ($928), the lowest were in Alabama ($1,022), Arkansas ($1,228), Louisiana ($1,296) and Mississippi ($1,311).
The top and bottom five states were the same in both 2021 and 2022.
“Huge gaps in average tax bills around the U.S. remain in place,” Barber said. “Those disparities are heavily connected to differences in local government and school services, public employee wages, economies of scale between large and smaller towns and the amount of commercial properties that help shoulder the local tax burden. Depending on what prospective buyers want in a community and its school system, the gaps can have a big impact on how easy or hard it is to sell a home.”
Northeastern and midwestern metro areas have highest effective rates
Among 223 metropolitan statistical areas around the country with a population of at least 200,000 in 2022, 19 of the 20 highest effective tax rates were in the Northeast and Midwest. Nine of the top 10 were in New York, New Jersey, Connecticut and Illinois.
Metro areas with the highest effective property tax rates in 2022 were Rochester, NY (2.52 percent); Trenton, NJ (2.24 percent); Rockford, IL (2.07 percent); Peoria, IL (1.96 percent) and Atlantic City, NJ (1.96 percent).
Aside from Rochester, the highest rates among metro areas with a population of at least 1 million in 2022 were in Hartford, CT (1.85 percent); Chicago, IL (1.75 percent); Cleveland, OH (1.57 percent) and New York, NY (1.39 percent).
The lowest effective rates in 2022 were in Honolulu, HI (0.28 percent); Daphne-Fairhope, AL (0.29 percent); Montgomery, AL (0.30 percent); Tuscaloosa, AL (0.32 percent) and Knoxville, TN (0.32 percent).
Aside from Honolulu, the lowest rates among metro areas with a population of at least 1 million in 2022 were in Phoenix, AZ (0.36 percent); Nashville TN (0.40 percent); Las Vegas, NV (0.43 percent) and Salt Lake City, UT (0.47 percent).
Property taxes increase faster than national average in two-thirds of U.S.
Average property taxes rose by more than the national 3 percent increase last year in 144, or 65 percent, of the 223 metro areas analyzed in the report. The majority of those areas were in the South and West regions, where the average tax across all metros increased 5.8 percent and 5.5 percent, respectively. The average increased just 0.7 percent in the Northeast and 2.7 percent in the Midwest.
Metro areas with a population of at least 1 million that had the largest increases in average property taxes from 2021 to 2022 were Pittsburgh, PA (up 59.6 percent); Rochester, NY (up 23.2 percent); Honolulu, HI (up 15.3 percent); Salt Lake City, UT (up 14.3 percent) and Miami, FL (up 12.6 percent).
Major markets with the largest decreases in average property taxes last year included Philadelphia, PA (down 9 percent); Grand Rapids, MI (down 8.1 percent); Buffalo, NY (down 5.4 percent); Phoenix, AZ (down 2.6 percent) and Tucson, AZ (down 1.4 percent).
Average annual property tax tops $10,000 in 24 counties
Among 1,761 U.S. counties with at least 10,000 single-family homes in 2022, 24 had an average single-family-home property tax of more than $10,000. Of those, 13 were in the New York City metro area. The top five average taxes in metros with at least 100,000 housing units were in New York County (Manhattan), NY ($42,627); Marin County, CA (outside San Francisco) ($14,415); Essex County, NJ (outside New York City) ($13,168); Bergen County, NJ (outside New York City) ($13,115) and Nassau County (outside New York City), NY ($12,890).