Short answer. The U.S. average effective property tax rate is approximately 1.1% of home value annually. State-level rates range from 0.3% (Hawaii) to 2.2% (New Jersey).
Property taxes are levied by local governments — counties, cities, school districts — to fund public services. The combined effective rate varies dramatically by location.
State-level effective rates (2024)
- New Jersey: 2.21%
- Illinois: 2.08%
- New Hampshire: 1.96%
- Connecticut: 1.79%
- Vermont: 1.78%
- Texas: 1.65%
- Wisconsin: 1.51%
- U.S. average: 1.10%
- Florida: 0.86%
- California: 0.71% (limited by Proposition 13)
- Colorado: 0.51%
- Hawaii: 0.27%
What determines property taxes
Property taxes are computed by multiplying the assessed value (typically a percentage of market value) by the local mill rate. Assessment practices vary widely: some states reassess annually (Florida, Texas), others use rolling multi-year averages (California's Prop 13 limits annual assessment increases to 2%).
The 2017 SALT cap
The Tax Cuts and Jobs Act of 2017 capped the federal deduction for state-and-local taxes at $10,000 per household. This particularly affected high-property-tax-state homeowners — approximately 23 million U.S. households were limited by the cap, concentrated in New Jersey, New York, California, Connecticut, and Maryland.
Property tax as share of home cost
For a typical U.S. owner, property taxes represent about 25% of total monthly housing costs (after the mortgage payment). For owners in high-tax states like New Jersey, the ratio can reach 35-40%.
Sources
U.S. Census Bureau Survey of Construction; National Association of Realtors Existing Home Sales report; Freddie Mac Primary Mortgage Market Survey; National Bureau of Economic Research Business Cycle Dating Committee.