Property taxes collected on single-family homes in the United States surged almost 7% in 2023, soaring to $363 billion, according to a new report by ATTOM, a real estate data analytics company.
That’s almost double the previous year’s increase of 3.6% and the steepest jump in five years., Individually, the average homeowner shelled out $4,062 in property taxes last year, about 4% more than in 2022.
“The tax increases were likely connected, at least in part, to inflationary pressures on the cost of operating local governments and schools, along with rising public employee wages and other major expenses,” said ATTOM CEO Rob Barber in a statement.
If property taxes continue to climb at 4% per year, homeowners who haven’t factored such increases into their housing budget may be surprised at tax time.
Which States Have the Highest Property Taxes?
In 2023, the top 10 states with the highest effective property tax rates were concentrated in the Northeast and Midwest. The effective tax rate is the average percentage of an area’s home values that is paid in property taxes.
| State | 2023 Effective Tax Rate | Rate Of Change In 2023 |
|---|---|---|
|
Illinois
|
1.88%
|
5.6%
|
|
New Jersey
|
1.64%
|
-8.4%
|
|
Connecticut
|
1.54%
|
-1.9%
|
|
New York
|
1.46%
|
8.1%
|
|
Nebraska
|
1.46%
|
7.4%
|
While some states saw their effective tax rates fall last year, others had significant increases. They include Montana (32.4%), Kentucky (27.1%), the District of Columbia (21.5%), Oklahoma (18.5%) and Colorado (17.5%).
Tax rates and rate changes also varied significantly among major cities. For instance, Chicago recorded one of the highest property tax rates at 1.84%, up more than 5% year over year. Meanwhile, Phoenix had a tax rate of 0.38% and Nashville clocked in at 0.45%, despite tax rate hikes of 5.5% and 12.5% respectively.
How States Are Responding
The rapid rise in property tax costs is straining many homeowners’ budgets, prompting several states to take steps to try to ease the burden.
For example, in New Jersey, which has the nation’s second highest effective property tax rate, new laws have expanded the Senior Freeze program, which issues credits to qualified older or disabled homeowners to offset property tax increases.
In Pennsylvania, legislation passed last year made more homeowners eligible to receive up to $1,000 in property tax rebates through a program funded by state lottery and gaming revenues.
Ask your area’s tax assessor or search online to see whether you qualify for any state or local programs that offer grants, loans or tax credits for property tax relief.
What Homeowners Can Do
It’s important to take action as soon as possible if you’re unable to pay your property tax bill. If you owe taxes and don’t pay, the government can take action to collect them. That could have dire consequences, including government liens, levies and possible foreclosure.
“Homeowners facing difficulty with property tax payments can explore several options,” says Paul Miller, a CPA at Miller and Company, in New York. “These include everything from negotiating payment plans with local authorities to spread[ing] out payments to cautiously considering options like refinancing or loans to cover tax bills.”
Consult an expert, such as a tax accountant, CPA or real estate attorney. They can assess your situation and provide advice on how to tackle your property tax obligations.
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