BAM Key Details:
- A new ATTOM report on 2022 property taxes for 87 million U.S. single-family homes shows a 3.6% annual increase in property taxes. That increase was more than twice the 1.6% growth seen in 2021 but less than the 5.4% increase in 2020.
- Average property tax on single-family homes rose 3% in 2022 after rising 1.8% in 2021, with an effective tax rate nationwide of 0.83%, down from 0.86% in 2021 to its lowest rate since at least 2016.
A new ATTOM report shows property taxes are up 3.6% across the U.S., rising from $328 billion in 2021 to $339.8 billion in 2022. That increase was more than twice the 1.6% growth in property tax revenue for 2021, though still less than the 5.4% increase in 2020.
The average property tax, according to the ATTOM report, on single-family homes in the U.S. rose 3% in 2022 to $3,901 after climbing 1.8% in 2021.
The effective tax rate nationwide, based on the latest average property tax, fell slightly to 0.83% from the previous year’s 0.86%, dropping to its lowest rate since at least 2016.
Property tax increases even as the property tax rate declines
Effective property tax rates continued to decline in 2022 even as total taxes increased because home values rose faster than taxes nationwide.
The estimated market value of the average single-family home still climbed 7.9% year-over-year in 2022, despite the meteoric rise in mortgage rates and the consequent dampening in buyer demand. That increase in home values exceeded the average property tax increase, resulting in the marginal dip in effective rates.
The downward trajectory for effective rates could reverse if the decline in home values that began in the second half of 2022 continues in 2023. Home prices did start to slide in some markets amid climbing mortgage rates, high consumer inflation, and other factors that cut into what home seekers across the U.S. could afford.
But with the recent increase in home prices after seven months of decline, an imminent reversal for effective property tax rates is unlikely.
Property taxes continued their never-ending climb last year, with wide disparities continuing from one area of the country to another, connected to varying costs, services, and tax bases. But, on balance, the latest increase nationwide again was modest. This year, local governments and school systems will face even greater challenges keeping taxes in check, given rising inflation rates and a growing number of commercial properties that could be eligible for tax reductions after suffering a surge of vacancies during the pandemic.
States with the highest and lowest effective property tax rates
The ATTOM report included effective property tax rates for each state, which supports the following lists of states with the highest and lowest effective tax rates.
States with the highest effective property tax rates in 2022:
- New Jersey (1.79% effective tax rate)
- Illinois (1.78%)
- Connecticut (1.57%)
- Vermont (1.43%)
- Nebraska (1.36%)
- Pennsylvania (1.29%)
- New Hampshire (1.28%)
- Ohio (1.27%)
- New York (1.26%)
- Iowa (1.25%)
States with the lowest effective property tax rates in 2022:
- Hawaii (0.30% effective tax rate)
- Alabama (0.37%)
- Arizona (0.39%)
- Colorado (0.40%)
- Tennessee (0.42%)
- Utah (0.44%)
- Nevada (0.44%)
- Idaho (0.46%)
- South Carolina (0.46%)
- West Virginia (0.47%)
Highest tax states are in the Northeast
The Northeast had seven of the 10 states with the highest average property taxes in 2022, with New Jersey at the top of the list.
Top five states with the highest average property taxes in 2022:
- New Jersey ($9,527 — more than 10 times the average property tax in West Virginia)
- Connecticut ($7,671)
- Massachusetts ($7,044)
- New Hampshire ($6,855)
- New York ($6,673)
All 10 of the states with the lowest average property tax in 2022 were in the South. Here are the top five:
- West Virginia ($928)
- Alabama ($1,022)
- Arkansas ($1,228)
- Louisiana ($1,296)
- Mississippi ($1,311)
Both these lists were the same in 2021 and 2022.
Huge gaps in average tax bills around the U.S. remain in place,” Barber said. “Those disparities are heavily connected to differences in local government and school services, public employee wages, economies of scale between large and smaller towns and the amount of commercial properties that help shoulder the local tax burden. Depending on what prospective buyers want in a community and its school system, the gaps can have a big impact on how easy or hard it is to sell a home.
Northeast and Midwest metros have the highest effective tax rates
Of the 223 U.S. metros with populations of at least 200,000 in 2022, 19 of the 20 metros with the highest effective property tax rates were in the Northeast and Midwest.
Nine of the top 10 metros were in New York, New Jersey, Connecticut, and Illinois.
The top five metros with the highest effective tax rates in 2022:
- Rochester, NY (2.52%)
- Trenton, NJ (2.24%)
- Rockford, IL (2.07%)
- Peoria, IL (1.96%)
- Atlantic City, NJ (1.96%)
Aside from Rochester, the top five metros with populations of at least one million with the highest effective tax rates include—
- Hartford, CT (1.85%)
- Chicago, IL (1.75%)
- Cleveland, OH (1.57%)
- New York, NY (1.39%)
The top five metros with the lowest effective tax rates in 2022:
- Honolulu, HI (0.28%)
- Daphne-Fairhope, AL (0.29%)
- Montgomery, AL (0.30%)
- Tuscaloosa, AL (0.32%)
- Knoxville, TN (0.32%)
Aside from Honolulu, the top five metros with populations of at least one million and with the lowest effective tax rates include—
- Phoenix, AZ (0.36%)
- Nashville TN (0.40%)
- Las Vegas, NV (0.43%)
- Salt Lake City, UT (0.47%)
Property taxes rise faster than the national average in two-thirds of the U.S.
In 144 (65%) of the 223 metro areas analyzed in ATTOM’s report, average property taxes increased by more than the national 3%.
The majority of those higher tax areas were in the South and West, where the average property tax across all metro areas rose 5.8% and 5.5%, respectively.
The average property tax rose just 0.7% in the Northeast and 2.7% in the Midwest.
The top five metro areas with populations of at least one million that saw the biggest increases in average property taxes from 2021 to 2022:
- Pittsburgh, PA (up 59.6%)
- Rochester, NY (up 23.2%)
- Honolulu, HI (up 15.3%)
- Salt Lake City, UT (up 14.3%)
- Miami, FL (up 12.6%)
The top five major markets with the biggest drops in average property taxes from 2021 to 2022:
- Philadelphia, PA (down 9%)
- Grand Rapids, MI (down 8.1%)
- Buffalo, NY (down 5.4%)
- Phoenix, AZ (down 2.6%)
- Tucson, AZ (down 1.4%)
Average annual property tax exceeds $10K in 24 counties
Among the 1,761 U.S. counties with at least 10,000 single-family homes, 24 had an average property tax of more than $10,000 in 2022.
Of those 24, 13 were in the New York City metro area.
The top five metros with at least 100,000 housing units and the highest average property taxes:
- New York County (Manhattan), NY ($42,627)
- Marin County, CA (outside San Francisco) ($14,415)
- Essex County, NJ (outside New York City) ($13,168)
- Bergen County, NJ (outside New York City) ($13,115)
- Nassau County (outside New York City), NY ($12,890)
ATTOM report methodology
ATTOM’s report is based on its 2022 property tax analysis for 87 million U.S. single-family homes. Data was collected from county tax assessor offices nationwide at the county, metro, and state levels, along with the estimated market values of single-family homes calculated using an automated valuation model (AVM).
The effective property tax rate is defined as “the average annual property tax expressed as a percentage of the average estimated market value of homes in each geographic area.”
Read the full report for more details.
Top takeaways for real estate agents
Property taxes are an important but often overlooked part of housing costs and are always worth including in any information you provide buyers on particular properties. Make sure your buyers know exactly what costs they’ll be responsible for if their offer is accepted.