Comparing Property Taxes
This calculator can be used to compare estimates of the property taxes paid on two homes in two distinct locations in the United States. The calculator does this by using the median property taxes paid and homes values at the state and county level. The calculator needs a total of five inputs, including:
- The home’s value or selling price if the user is thinking about purchasing a new home
- The state and county for the first location
- The state and county for the second location
The calculator then provides the user with two sets of three outputs:
- An estimate of the property taxes, sometimes referred to as real estate taxes for each of the two locations
- The tax rate per 1,000 for each of the two locations. The tax rate is multiplied by the home value to estimate the property taxes
- The percentile rank for each of the two locations. A percentile rank of 70% tells us that 70% of the counties in the United States have higher tax rates than this location, while a percentile rank of 10% tells us that only 10% of the counties in the United States have higher tax rates
What is property or real estate tax?
In the United States property taxes are typically collected at the city or county level. The money collected is used to provide citizens of that county or city with essential services. This includes funding of police and fire departments, roadway paving, school systems, wastewater treatment, garbage disposal, snow removal, street cleaning, library services, and sporting facilities such as baseball and soccer fields. These funds can also be divided into the types of costs paid by these governments such as salaries or wages of their employees, capital improvement programs, operating expenses (such as electricity and natural gas), and debt service.
How are Real Estate Taxes Calculated?
As the name implies, the tax is on property which is usually divided into two sections that reflect the value of the land and the home, sometimes referred to as improvements, owned by the taxpayer. Together, the assessed value of the land and improvements represent the property’s net taxable value. The assessed value of land and home is then multiplied by a tax rate to determine the amount of tax owed. The higher the assessed value, the more the owner pays in real estate taxes.
Our calculator provides an estimate of real estate taxes at the county level by leveraging information published by the United State Census Bureau and specifically the 2020 American Community Survey. Here we used the median real estate taxes paid and the median home value (by county) to develop a rate that would be applied to each 1,000 in home value. The Census survey contains a vast quantity of data for all fifty state and the District of Columbia. In fact, there are data for roughly 3,200 counties in the United States.
The approach we are using allows users of our calculator to quickly assess the difference in real estate taxes in various parts of the country. For example, an estimate for a 750,000 home in Sonoma County, California is around 5,400, while the owner of a home of equal value in Bergen County, New Jersey might be paying closer to 15,700 in property taxes.