New Jersey has the highest property tax rate in the country, with a mean effective rate of 1.88% on owner-occupied homes. Illinois ties at 1.88%, but New Jersey also leads in total dollars paid, with the average homeowner paying $8,290 per year. That combination of high rates and high home values makes New Jersey the clear leader on both measures.
Top 10 States by Property Tax Rate
Effective property tax rate measures total property taxes paid as a percentage of a home’s value. Based on 2024 American Community Survey data compiled by the Tax Foundation, these ten states have the highest rates:
- New Jersey: 1.88%
- Illinois: 1.88%
- Connecticut: 1.54%
- Vermont: 1.51%
- New Hampshire: 1.50%
- Nebraska: 1.44%
- Texas: 1.40%
- Ohio: 1.36%
- Iowa: 1.33%
- Wisconsin: 1.32%
For context, the national average effective rate hovers near 1%. So homeowners in New Jersey and Illinois are paying roughly double the national norm as a share of their home’s value.
Rates Versus Dollar Amounts
A high rate doesn’t always mean the biggest bill. What you actually pay depends on your home’s assessed value, so states with expensive housing markets can produce large tax bills even at moderate rates. When you rank states by the average dollar amount paid on an average-value home, the list shifts noticeably:
- New Jersey: $8,290
- New Hampshire: $6,278
- Massachusetts: $6,017
- Connecticut: $5,838
- California: $5,388
- Vermont: $5,066
- Illinois: $4,995
- Rhode Island: $4,644
- Washington: $4,596
- District of Columbia: $4,260
California is a good example of the rate-versus-bill distinction. It doesn’t crack the top 10 in effective rate, but high home values push the average annual bill above $5,300. Massachusetts follows the same pattern. Meanwhile, Illinois ties New Jersey on rate but ranks seventh in dollar terms because its median home values are significantly lower.
Why These States Charge So Much
Property taxes fund local services: schools, police and fire departments, road maintenance, libraries, parks, and water and sewer systems. States at the top of the list tend to share a few structural features that push rates higher.
Heavy reliance on local government is the biggest driver. In states like New Jersey and Illinois, hundreds of small municipalities each maintain their own police departments, school districts, and public works crews. That fragmentation means less bargaining power on bulk purchases and more administrative overhead than a consolidated county model would produce. Larger towns can spread fixed costs across more taxpayers, but smaller communities end up with higher per-household bills.
Limited alternative revenue is the other major factor. Towns that lack a commercial tax base, meaning large businesses, corporate headquarters, or retail corridors, have to fund nearly all municipal services through residential property taxes alone. When schools, police, and infrastructure all draw from the same pot, rates climb quickly.
The No-Income-Tax Connection
Two of the top ten states, New Hampshire and Texas, charge no state income tax. That’s not a coincidence. States that forgo income tax still need revenue, and property taxes are one of the main tools available. New Hampshire leans on property taxes especially hard, with an effective rate of 1.50% and an average annual bill of $6,278, the second highest in the country in dollar terms.
If you’re considering a move to a state with no income tax, keep in mind that property taxes (and sometimes sales taxes) often make up the difference. The total tax picture, not just one line item, determines what you actually keep.
How Homeowners Offset High Bills
Most states with high property taxes offer relief programs that can significantly reduce what certain homeowners owe. The details vary, but the most common programs fall into a few categories.
Homestead exemptions reduce the taxable value of your primary residence by a set dollar amount. If your state offers a $25,000 homestead exemption, your taxes are calculated on a home value that’s $25,000 lower than its assessed worth. Many states apply these automatically, while others require a one-time application.
Senior and disability credits target homeowners who are 65 or older or who have a permanent disability. These programs typically have income limits and can reduce your tax bill by a fixed percentage or cap the taxable value of your home. Some states offer reductions as generous as 100% for qualifying homeowners below certain income thresholds.
State-funded rebate programs send cash back to homeowners (and sometimes renters) after they’ve paid their taxes. Eligibility usually depends on income, age, or disability status. These programs change frequently, so checking your state’s tax authority website each year is the best way to find current options and deadlines.
If you’ve owned your home for a while and never applied for any of these programs, you could be leaving money on the table. Your county assessor’s office or state tax agency can tell you what’s available and how to apply.
What This Means if You’re Buying a Home
Property taxes are a recurring cost that directly affects how much house you can afford. A $400,000 home in New Jersey carries roughly $7,500 in annual property taxes at the 1.88% effective rate, adding about $625 per month to your housing costs on top of your mortgage payment, insurance, and maintenance. That same home in a state with a 0.5% effective rate would cost around $2,000 a year in property taxes, a difference of more than $450 per month.
Lenders factor property taxes into your debt-to-income ratio when deciding how much to lend you, so higher taxes can shrink your maximum loan amount. When comparing homes across state lines, look at the full monthly cost (mortgage, taxes, insurance) rather than just the purchase price. A cheaper home in a high-tax state can cost more per month than a pricier one in a low-tax state.