If you Are looking to be the owner of a property in the US, you’ll have to pay property taxes.
Property taxes are a necessary part of real estate. Fortunately, property taxes vary by state, so you have little control over how much property tax you have to give.
Property taxes even vary by county, but we’ll estimate property taxes by the state to help you decide where to purchase a home.
Nationwide, Americans pay a standard of $2,471 in property taxes each year. However, this number can vary drastically between states as residents of Alabama pay $587 annually and residents of New Jersey pay $8,362 annually.
The state you choose could have a major impact on the amount of property tax you pay each year.
HOW PROPERTY TAXES ARE CALCULATED?
To understand why property taxes differ by state so much, it’s important to first know the property tax calculation.
For each homeowner, the annual property tax amount is calculated by multiplying some millage rate by the property value.
The millage rate is, also called the property tax rate, is a percentage tax rate found using the state’s average mill levy.
Each county has diverse mill levies, which is a flat dollar tax amount paid for each $1,000 in property value.
Property taxes apply proportionately, which means to calculate your entire tax amount for the year, you can apply the millage rate indiscriminately.
For example, if the millage rate is 1.8% in your state and you have a $500,000 home, your overall property tax would be $9,000.
This is vital because it means that when considering property taxes, you have to equally pay attention to the property tax rate and the property value.
The reason New Jersey has the highest property tax in the US by far is that it has one of the highest millage rates and one of the highest median home values.
These two factors give an average property tax over 30% higher than the next highest state, Connecticut.