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March 2019

Washington homeowners pay 12th highest real estate taxes in U.S.

March 6, 2019

Homeowners in the state of Washington pay the 12th highest real estate taxes per year, according to an analysis by the National Association of Home Builders. The federation, whose members construct about 80 percent of the new homes built in the U.S., found property tax rates differ substantially across the United States.

Using data from the 2017 American Community Survey, NAHB compared average annual real estate taxes on owner-occupied homes, average effective property tax rates (Washington ranks 28th), and real estate taxes paid as a share of total property tax revenue (Washington ranks 6th).

New Jersey retained its dubious distinction of having the highest average real estate tax bill per homeowner, at $8,485, as well as the highest effective tax rate (2.13 percent).

NAHB said the figures include real estate taxes levied by state and local governments, "but the extent to which each level of government depends on property tax revenues is vastly different." Whereas only two percent of state tax revenue comes from property taxes, the comparable figure for local goverments is more than 70 percent.


How Washington Compares


Average Real Estate Taxes Paid per Year (owner-occupied homes)

State
Rank
Average Payment
New Jersey
1
$8,485
Alabama
50
$678
WASHINGTON
12
$3,569
California
8
$4,623
Oregon
15
$3,291


Effective Property Tax Rates

State
Rank
Average Payment
Average Payment
New Jersey
1
2.13%$21.34
Hawaii
50
0.30%$3.03
WASHINGTON
28
0.85%$8.53
California
35
0.70%$6.99
Oregon
23
0.91%$9.11


Researchers note low rates combined with extremely high home values results in middle-of-the-pack per-homeowner property tax bills. In Hawaii, for example, the average home value of $692,938 is the highest in the country, and about 50 percent higher than New York's average of $60,075. New Yorkers pay an effective annual rate of 1.32% and $13.16 per $1,000 of value, placing it 14th on the list.


State
Rank
Average Payment
New Jersey
1
60.2%
Wyoming
50
16.1%
WASHINGTON
6
55.7%
California
10
50.1%
Oregon
9
51.4%


A comparison of real estate taxes paid as a share of total property tax revenue shows stark differences, ranging from 16.1% in Wyoming to 60.1% in New Jersey.

In its 9-page report on property tax rates, bills, and role in state budgets for HousingEcnomics.com, NAHB researchers found property taxes accounted for nearly 40 percent of state and local tax receipts, on average. Moreover, they noted the data illustrate that states rely much less heavily on property taxes as a source of revenue than do local governments.

Washington is one of 11 states where property taxes account for greater than five percent of tax collections. Other states are Alaska, Arizona, Arkansas, Kansas, Kentucky, Michigan, Montana, New Hampshire, Vermont, and Wyoming. In three of these states, New Hampshire, Vermont, and Wyoming, property tax collections make up more than 15 percent of their total tax receipts.

Researchers also looked at residential property taxes in the context of all property taxes collected by state and local governments. That analysis helped provide insight into the tax burden borne by homeowners as opposed to owners of commercial real estate and personal property. They found that homeowners in New York pay some of the highest property tax bills in the country, and that other property tax payments make up three-fifths of state and local property tax collections. By contrast, homeowners in New Jersey pay similarly high RET bills but, unlike New Yorkers, they pay three-fifths of property taxes collected in their state.