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These two ‘low tax’ states are getting socked with fast-rising property taxes
This U.S. city offers sun, palm trees — and rising property taxes. - Getty Images/iStockphoto
It’s not the heat; it’s the humidity. And the property taxes, too.
When looking at where property-tax payments have grown the most from prepandemic times, look at Florida first, according to a new analysis from real-estate brokerage Redfin RDFN.
Three of the top five major housing markets with the largest jumps in property-tax bills since 2019 are in the Sunshine State, the Redfin report showed.
There’s Jacksonville, with a nearly 60% increase in the median monthly property-tax bill. Then there’s Tampa with an approximately 57% increase, and Miami with a 48% increase.
The biggest increases, however, were outside of Florida. Indianapolis ranked first and saw property-tax bills climb nearly 67%, while just behind was Atlanta with a nearly 66% change. Nationally, there was a nearly 30% jump in property-tax bills since 2019, according to the report. (The increases are based on nominal dollars and not adjusted for inflation.)
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Across the country, the median monthly property-tax payment was $250 as of August, Redfin said. Among the fastest-growing bills, Indianapolis, Atlanta and Jacksonville were below that median. Tampa sat right on it, while monthly Miami bills were above it, at $367.
Florida’s property-tax pop is understandable given the lack of a state income tax and a real-estate market that’s boomed in recent years.
If home buyers want to see where fast-growing property taxes are taking up sizable chunks of a homeowner’s monthly housing costs, look at Texas — another warm-climate state with no state income tax and an influx of new residents in recent years.
In housing markets like Austin, Dallas, Houston, San Antonio and Fort Worth, property taxes make up nearly 20% of median monthly housing payments. Effective tax rates on assessed home values there range around 1.6% to 1.8%. (The effective rate is the percentage of a home’s assessed value that a homeowner is paying in annual property taxes, according to Redfin.)
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Housing payments encompass the cost of mortgage principal and interest, property taxes, homeowner’s insurance and mortgage insurance, per Redfin.
Illinois, New York and New Jersey are other places where property taxes account for nearly 20% of monthly housing payments and where effective tax rates are comparable, the data show.
To be clear, New York and New Jersey homeowners still owe several hundred dollars more in property taxes than Texas homeowners, on a median basis.
Homeowners on Long Island, in New York’s Nassau County, paid a median $905 in property taxes on their monthly bill in August, while Austin, Texas, homeowners paid $697.
But Texas property-tax bills have grown at much quicker rates since 2019 when compared with the New York and New Jersey markets.
Florida added nearly 670,000 people and almost $99 billion in adjusted gross income to the state’s tax base between 2019 and 2022, according to a Tax Foundation analysis of IRS migration data. Texas added nearly 490,000 people, who brought with them over $27 billion in adjusted gross income, the think tank’s analysis showed.
The Redfin numbers, released Monday, are a reminder that home buyers who like the idea of living in what are broadly perceived as low-tax states will not be escaping the taxman.
Even if state lawmakers aren’t imposing a tax on income, cities, towns and counties will still be levying a bill for schools, parks, roads and other municipal services.
In Florida, the property-tax increases may be “the last straw for some prospective buyers,” said Elijah de la Campa, a Redfin senior economist.
“Florida was alluring for remote workers during the pandemic because of its relatively affordable housing. Somewhat ironically, the state’s population boom has driven up home prices, and property taxes along with it,” he said.
Florida residents are now facing higher home prices compared with before the pandemic, along with higher homeowners-association costs and insurance premiums. In the state, “home buyers have realized they may save money by paying no income tax, but their property-tax bill will increase,” de la Campa said.
The Redfin analysis comes at a potential crossroads for property taxes. Next week, North Dakota voters will decide on a ballot measure to prohibit property taxes that are based on the assessed values of homes.
If Measure 4 passes, North Dakota would become the first state without property taxes. Passage could accelerate repeal attempts in other states, critics and supporters alike say.
How Nashville and Las Vegas stand out
Tennessee and Nevada are two other states without income taxes. Yet property taxes in the major housing markets in those states don’t pack the same pinch, according to Redfin numbers. In fact, Las Vegas bills took a turn lower.
Las Vegas was one of two housing markets where monthly property-tax bills decreased from 2019, with bills there declining 4.3%. (The other market was Pittsburgh, where they fell less than 2%.)
Meanwhile, the median monthly amount of property taxes paid in Nashville, Tenn., matched the national increase, with a 30% jump since 2019. However, the median bill was $152, far below the national median of $250. Property taxes accounted for 4.7% of a monthly housing tab in Nashville, well below the approximate 8% share nationally.
Las Vegas and Nashville had some of the lowest effective property-tax rates and median monthly tax bills among 50 analyzed markets.
Washington also has no state income tax, and Seattle homeowners saw a nearly 40% increase in the size of their monthly payments since 2019, closer to the likes of Texas and Florida. With a $545 median monthly payment, the sum accounted for 8.5% of monthly housing costs.
That’s in line with the share of money going toward property taxes in Florida markets, but it’s below the share paid by Texas homeowners.
