2
higher property tax rates. Classification imposes lower property taxes on homesteads, but higher
property taxes on business and apartment properties.
Homestead Property Taxes
There are wide variations across the country in property taxes on owner-occupied primary
residences, otherwise known as homesteads. An analysis of the largest city in each state shows
that the average effective tax rate on a median-valued homestead was 1.49 percent in 2017 for
this group of 53 cities.
1
At that rate, a home worth $200,000 would owe $2,980 in property taxes
(1.50% x $200,000). On the high end, there are three cities with effective tax rates that are
roughly 2.5 times higher than the average – Bridgeport, Aurora (IL), and Detroit. Conversely,
there are seven cities where tax rates are less than half of the study average – Honolulu,
Charleston (SC), Boston, Cheyenne (WY), Denver, Birmingham (AL), and Washington DC.
Highest and Lowest Effective Property Tax Rates on a Median Valued Home (2017)
Highest Property Tax Rates Lowest Property Tax Rates
1 Bridgeport (CT) 3.81%
Why: High property tax reliance 49
Denver (CO) 0.66%
Why: Low property tax reliance,
high home values, classification
2 Aurora (IL) 3.76%
Why: High property tax reliance 50
Cheyenne (WY) 0.65%
Why: Low property tax reliance
3 Detroit (MI) 3.63%
Why: Low property values 51
Boston (MA) 0.51%
Why: High home values,
Classification shifts tax to business
4 Newark (NJ) 3.16%
Why: High property tax reliance 52
Charleston (SC) 0.50%
Why: Classification shifts tax to
business
5 Milwaukee (WI) 2.57%
Why: Low property values,
high property tax reliance
53
Honolulu (HI) 0.31%
Why: High home values, low local
gov’t spending, classification
Note: Data for all cities: Figure 2 (page 18), Appendix Table 1a (page 50), and Appendix Table 2a (page 58).
The average tax rate for these cities fell very slightly between 2016 and 2017, from 1.497 percent
to 1.495 percent, with increases in 24 cities, decreases in 27, and no change in 1 city.
2
The
largest increase was in Sioux Falls (SD), where the effective rate rose by about 11 percent, which
drove the city’s ranking up from 23
rd
to 20
th
highest. The next largest increases were in
Burlington (VT), Chicago, Billings (MT), Fargo (ND), and Portland (OR). The largest decrease
was in Boston, which had a 15.9 percent decline in its effective tax rate. The next largest declines
were in Charlotte (NC), Louisville, Portland (ME), and Detroit.
Note that differences in property values across cities mean that some cities with high tax rates
can still have low tax bills on a median valued home if they have low home values, and vice
versa. For example, Louisville and Los Angeles have similar tax rates on a median valued home,
but because the median valued home is worth so much more in Los Angeles ($594k vs. $151k),
the tax bill is far higher in Los Angeles (3
rd
highest) than in Louisville (43
rd
highest).
Effective tax rates rise with home values in about half of the cities (27 of 53), and this pattern has
a progressive impact on the property tax distribution. Usually, this relationship occurs because of
1
The largest cities in each state includes 53 cities, because it includes Washington (DC) plus two cities in Illinois
and New York since property taxes in Chicago and New York City are so different than the rest of the state.
2
The largest city in South Carolina changed from Columbia in 2016 to Charleston in 2017, so the report provides
year-to-year changes for only 52 of the 53 “largest cities in each state”.