ATTOM’s latest year-end 2022 Property Tax report shows that property taxes for 87 million U.S. single-family homes has increased by 3.6% from $328 billion in 2021, to $339.8 billion in 2022. Moreover, the average tax on single-family homes in the U.S. increased by 3%, reaching $3,901 in 2022, after a 1.8% increase the previous year. The effective tax rate, which is the average annual property tax expressed as a percentage of the average estimated market value of homes in each geographic area, decreased to 0.83% nationwide in 2022, down from 0.86% in 2021, to the lowest point since 2016.
However, according to the report, the effective tax rate could reverse its downward trend if the current drop in home values continues, which began in the second half of 2022 and has persisted in 2023. The drop is due to factors such as doubled mortgage rates, high consumer price inflation, and other forces that have reduced what home seekers can afford.
States with the highest effective property tax rates in 2022 were New Jersey (1.79%), Illinois (1.78%), Connecticut (1.57%), Vermont (1.43%), and Nebraska (1.36%). States with the lowest effective tax rates were Hawaii (0.30%), Alabama (0.37%), Arizona (0.39%), Colorado (0.40%), and Tennessee (0.42%).
Seven of the top 10 states with the highest average property taxes in the U.S. in 2022 were in the Northeast region, led by New Jersey with an average single-family-home property tax of $9,527 in 2022, which was more than 10 times the average of $928 in West Virginia, the state with the nation’s smallest average levy. The 10 states with the lowest average tax in 2022 were all in the South, with West Virginia ($928), Alabama ($1,022), and Arkansas ($1,228) leading the states with the lowest average property taxes.
The gaps in average tax bills across the U.S. 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.
Among 223 metropolitan statistical areas around the country with a population of at least 200,000 in 2022, 19 of the 20 highest effective tax rates were in the Northeast and Midwest. Nine of the top 10 were in New York, New Jersey, Connecticut, and Illinois. The metro areas with the highest effective property tax rates in 2022 were Rochester, NY (2.52%), Trenton, NJ (2.24%), Rockford, IL (2.07%), Peoria, IL (1.97%), and Springfield, IL (1.96%).
In conclusion, the 2022 property tax analysis from ATTOM shows that property taxes for single-family homes in the U.S. have increased, with the average tax also up. However, the effective tax rate has decreased slightly due to the increase in home values outpacing the rise in taxes. The report also highlights the significant gaps in average tax bills across different states and metropolitan areas, which are closely tied to differences in local government and school services, public employee wages, economies of scale, and the amount of commercial properties.
To learn more and access more detailed data or get the data behind the stories, contact one of ATTOM’s data experts.