Where property tax takes the biggest bite out of income

Rates and bills are the usual way to compare property tax, but neither tells you how hard the tax is to pay. A $5,000 bill means something very different to a household earning $60,000 than to one earning $150,000. One simple test is to divide the typical property tax bill by the typical household income in the same place.

For the whole country, the typical bill of $3,119 equals a little under 4% of median household income. In some counties, it is more than three times that.

The heaviest burden

Among counties with at least 50,000 owner households, the highest ratios are all in the New York area:

• Essex County, New Jersey: the typical bill is more than 12% of median household income
• Passaic County, New Jersey: about 11.4%
• Bronx County, New York: about 11.2%
• Hudson County, New Jersey: about 10.4%
• Union County, New Jersey: about 9.7%
• Greater Bridgeport, Connecticut: about 9.7%
• Manhattan (New York County): about 9.6%
• Camden County, New Jersey: about 9.2%
• Rockland County, New York: about 9.1%
• Mercer County, New Jersey: about 8.9%

Two caveats apply. First, for several of these counties the Census survey only records the median tax as “$10,000 or more,” so the true share is probably even higher. Second, household income here covers all households, renters included, while property tax is paid directly only by owners. In places with many renters, such as the Bronx and Manhattan, the ratio overstates the burden on a typical owner household, which usually earns more than a typical renter household.

Why the Northeast stands out

The pattern follows the state rankings. New Jersey, Connecticut and New York all have high effective rates, expensive homes and local governments that raise much of their school funding from property tax. Even with high incomes, the bill takes a large share.

By state, the ratio is highest in New Jersey (about 9.3%), New York (7.7%), Connecticut (6.9%), New Hampshire (6.7%) and Illinois (6.4%). It is lowest in Alabama (1.2%), West Virginia (1.5%), Arkansas (1.7%) and South Carolina (1.8%).

The places that surprise

Some states with high rates have a fairly mild burden because incomes are solid and homes are moderately priced. Nebraska, Iowa and Ohio all have effective rates above 1.3%, but their typical bills equal only about 4% to 5% of income. California’s rate is below average at about 0.70%, yet the burden is above average, around 5.2%, because home values are so high relative to income.

What this means for retirees

The share-of-income test matters most for people whose income drops while their home value keeps rising, which is the situation of many retirees. A couple who could easily afford a $9,000 bill while working may find it takes 15% or 20% of a fixed retirement income. That is why most states offer senior freezes, deferrals or income-based credits, and why it is worth checking those programs before deciding whether to stay or move.

Common questions

What share of income does property tax usually take? Across the US, the typical bill equals a little under 4% of median household income.

Where is property tax hardest to afford? North and central New Jersey, New York City and its suburbs, and southwestern Connecticut have the highest ratios.

Which state has the lightest burden? Alabama, where the typical bill equals about 1.2% of median household income.

Does this include renters? The income figure covers all households. Renters pay property tax indirectly through rent, so the ratio is a rough guide, not an exact burden for owners.