Property taxes remain the primary source of revenue for many local governments, funding infrastructure, schools, and other projects that power day-to-day life. The amount of tax per resident varies widely depending on where one lives.
Earlier this year, the Tax Foundation, an independent tax policy nonprofit, launched a tool that tracks the median property taxes paid in every U.S. county over a five-year period. The results highlight several key trends in economics and politics across the country.
Property taxes account for more than 70 percent of local revenue, so the amount of money collected says a lot about what services a county will be able to provide to its residents.
Urban vs. Rural
On average, residents of urban areas pay much higher property taxes than their rural counterparts.
The highest property taxes on the Tax Foundation’s map came from areas around New York City, Chicago, Seattle, and other major cities. Tax bills in these counties added more to $5,000 per year or more, with some places going over $10,000 per year.
Conversely, the lowest property taxes are in rural areas. There are 13 counties where property taxes are less than $200 per year, mainly in Alaska, Alabama, and Louisiana. Many other counties throughout the South and Midwest have average property taxes of less than $1,000 per year.
What is the reason for these discrepancies? Like a lot of policy issues, it’s complicated and difficult to discern cause from effect.
One explanation is the prevalence of above-average home prices in cities and urban areas. Because property taxes are assessed as a percentage of home values, it follows that higher property taxes are paid in places with higher housing prices.
Beyond the urban-rural split, the Tax Foundation’s work also shows variation among how different counties in a state levy property taxes.
States with the greatest variance are those with one or two large urban centers surrounded by mostly rural areas. In Texas, taxes range from $5,088 in Collin County (home to the Dallas-Fort Worth area) to $582 in King County in rural north Texas.
Again, this variance is likely due to higher home prices in cities. As young people continue to move into cities, this trend will likely grow in the coming years.
The Tax Foundation also notes that people living in high-income areas tend to demand more from schools and other government services. Property taxes can be an appealing way to fund such services.
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