US Cities With the Highest and Lowest Real Estate Taxes
The cost of buying a home goes beyond the price of the home itself. For example, property taxes may increase, but their value varies depending on where you live. Here are the cities with the highest taxes.
A study by the Lincoln Land Policy Institute looked at property taxes in U.S. cities to find the highest and lowest tax rates. According to their method:
The report calculates property taxes for plots with different property values in three groups of cities:
- The largest city in every state and District of Columbia, plus Aurora, Illinois, and Buffalo, New York.
- 50 largest cities in the United States; and
- Parish in every state.
Overall, they found Bridgeport, Connecticut, had the highest tax rate at 3.88 percent. Honolulu had the lowest real estate tax rate at 0.30 percent.
However, there are several important factors to consider in your research. For example, many cities with low property tax rates have higher local sales or income taxes, so they do not rely as heavily on property taxes. They explain:
Cities with high local sales or income taxes do not need to generate that much property tax revenue, and therefore have lower property tax rates on average. For example, this report shows that Bridgeport, Connecticut, has the highest effective tax rate on a median home, and Birmingham, Alabama, has one of the lowest. However, in the city of Bridgeport, residents do not pay local sales or income taxes, whereas Birmingham residents pay both sales and income taxes to local governments.
Another important factor: property value. If the houses are expensive enough, the city can get by with a lower tax rate and still earn a decent income, since houses are expensive. According to the study, here are the cities with the highest and lowest rates:
Highest property tax rates
- Bridgeport, CT: 3.88%
- Detroit, Michigan: 3.81%
- Aurora, IL :: 3.72%
- Newark, NJ: 3.05%
- Milwaukee, Wisconsin: 2.68%
Lowest property tax rates
- Boston, Massachusetts: 0.67%
- Birmingham, Alabama: 0.66%
- Denver, Colorado: 0.66%
- Cheyenne, Wyoming: 0.65%
- Honolulu, Hawaii: 0.30%
Check out the full study at the link below, which includes more details on other cities, as well as an explanation of why rates vary in each city.
Comparative Study of the 50th State Property Tax (PDF) | Lincoln Institute via Forbes