In almost all of America, homeowners are subjected to neverending property taxes, so even if they own their home outright with no debt, they still must pay their municipality each year to keep it. That often seems very unfair. It feels like you can never really “own” your property. In places where property taxes are high, this can lead to trouble for retirees on a fixed income, who may have lived in their homes for decades but face rising property taxes each year in order to stay in the homes they’ve raised their families in. In the map below, The Tax Foundation shows a county-level view of America’s property tax landscape. Darker blue counties have higher property taxes.
As Andrey Yushkov explains, sometimes property taxes are a replacement for revenue in states that don't have other taxes, like New Hampshire and Texas. But in some states, property taxes are simply another layer of taxation beneath heavy income and sales taxes. Residents of New Jersey, Illinois, California, and New York can attest to it. Yushkov writes:
Property taxes are the primary tool for financing local governments. In fiscal year 2022, property taxes comprised 27.4 percent of total state and local tax collections in the United States, more than any other source of tax revenue, despite being levied almost exclusively at the local (not state) level. Local governments rely heavily on property taxes to fund schools, roads, police departments, fire and emergency medical services, and other services associated with residency and property ownership. Property taxes accounted for 70.2 percent of local tax collections in fiscal year 2022.
Some states with high property taxes, like New Hampshire and Texas, rely heavily on them in lieu of other major tax categories. This often involves greater devolution of authority to local governments, which are responsible for more government services than they are in states with greater reliance on state-level revenues like income or sales taxes. Other states, like New Jersey and Illinois, impose high property taxes alongside high rates in the other major tax categories.
While no taxpayers in high-tax jurisdictions will be celebrating their yearly payments, property taxes are largely rooted in the benefit principle of taxation: the people paying the property tax bills are most often the ones benefiting from the services (think about K-12 education, local surface roads, police and fire service, and parks). As Joan Youngman argues, a well-designed property tax, despite being the target of frequent political attacks, can be considered a good tax since it is usually transparent, simple, and stable, satisfying most of the principles of sound tax policy. Property taxes also tend to be more economically efficient than alternative sources of tax revenue.
Because property taxes are almost invariably levied locally, and millages (rates) are not directly comparable with each other across states, providing a useful state-level comparison can be difficult. In an effort to present a multifaceted view, we feature two maps focused on the property tax. The first looks at median property tax bills and effective property tax rates in each county in the United States, and the second compares effective tax rates across states.
Action Line: Do you want to live in a state with more layers of taxation than a lasagna? If you're looking for a better America, begin your search with Your Survival Guy's 2025 Super States. Then click here to subscribe to my free monthly Survive & Thrive letter.
