Property taxes across the U.S. rose to $328 billion in 2021

by Liz Hughes

Property taxes across the U.S rose last year, but the hike was much lower than in 2020, according to a new report. 

ATTOM found in its 2021 property tax analysis of almost 87 million single-family homes, $328 billion in property taxes were levied last year, up only 1.6% from $323 billion in 2020, well below the 5.4% increase seen in 2019 and the second smallest rise in taxes over the past five years. 

Last year the average tax on a single-family home increased just 1.8% to $3,785, from $3,719 in 2020, the smallest jump in five years and resulting in an effective tax rate of 0.9%, down from 2020’s 1.1%. 

Rick Sharga, executive vice president of market intelligence at ATTOM said it’s hardly a surprise property taxes increased in 2021 when home prices across the country rose by 16%. 

“In fact, the real surprise is that the tax increases weren’t higher, which suggests that tax assessments are lagging behind rising property values and will likely continue to go up in 2022,” he said. 

Effective rates fell in 2021 even as total taxes rose due to home values rising faster than taxes, according to the report. Median home values grew more than 10% in most of the country as demand remained higher than available inventory. 

In 74% of markets, property taxes increased faster than the national average. With the average property tax increase of 1.8% from 2020-2021, larger gains were seen in 163 or 74% of the 220 metros analyzed. 

Areas with the largest increases in average property taxes last year included Nashville, Tennessee, at 27%, Milwaukee, up 18.6%, Baltimore, up 12.3%, Grand Rapids, Michigan, up 12.3% and Louisville, Kentucky, up 11%. Markets with the largest decreases included Pittsburgh, which was down 35.1%, New Orleans, down 20.2%, Houston, down 18.7%, Dallas,  down 12.2% and Austin, Texas, down 7.7%.

The highest effective property tax rates were found in Illinois (1.86%), New Jersey (1.73%) and Connecticut (1.67%), Vermont (1.55%) and Pennsylvania (1.37%). Nebraska, New Hampshire, New York, Texas and Iowa were also in the top 10 states for highest effective property tax rates. 

Hawaii, Alabama, Utah, Arizona and Nevada had the lowest effective rates  at 0.27%, 0.37%, 0.39%, 0.41% and 0.41%, respectively. Other stats in the top 10 for lowest effective property tax rates included Idaho at 0.43%, Colorado at 0.43%, Tennessee at 0.45%, West Virginia at 0.5% and South Carolina at 0.5% 

The report also found metro areas in the northeast and midwest had the highest effective tax rates. Sixteen counties analyzed had an average single-family-home tax of more than $10,000 including 10 in the New York City area. The top five included Kings County, New York ($13,734), Marin County, California ($13,719), Westchester County, New York ($13,674), Essex County, New Jersey ($13,116), and Nassau County, New York ($13,095).

Sharga said prospective homeowners often fail to include property taxes when considering the cost of homeownership.

“But, especially in some of the higher-priced markets across the country, property taxes can add thousands of dollars to annual ownership costs, and possibly be the difference between someone being able to afford a home or not,” he said. “It’s critically important for consumers to factor in taxes, insurance and maintenance when determining whether they’re ready for the financial responsibility of homeownership.”

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