Warning: Property taxes are due April 10.
Before you search for the bill and the checkbook – and perhaps express a few choice nasty words aloud about the financial pinch – let me make you extra grumpy.
While Prop. 13 may keep California property taxes low for many folks, the overall financial burden remains relatively high. My trusty spreadsheet tells me we’re 10th worst among the states.
Let me tell you how I got to that conclusion.
My quest to gauge the proportional size of property taxes started with a recent study by WalletHub that dared to rank states by income tax burdens. It’s no easy chore, since not only do state taxes vary, many municipalities tack on their own levies. So, getting any sense of complete tax costs is a tricky exercise. But let’s see what WalletHub found.
Start with ranking effective tax rate, that is, the size of your bill vs. how much your home is worth. California’s Prop. 13, which limits jumps in rates and assessed value, helps property tax burdens in the state appear relatively low by this measure.
California’s 0.81 percent effective rate, by WalletHub math – that’s 81 cents per $100 of assessed value – was tied for 17th lowest among the states. That’s not bad. It’s not Hawaii at 0.27 percent, the national low. But it ain’t close to the worst of the lot: New Jersey, 2.35 percent, Illinois, 2.30 percent, and New Hampshire, 2.15 percent.
Now that effective tax rate is charged against the property’s value. Property valuations for tax purposes are part science, part art, and part political. Obviously, the tax collector wants the highest valuation to take in the most cash. One must admit that Prop. 13 is quite good at keep taxable valuations low.
Still, California housing is pricey. And by WalletHub’s calculation, the median value in the state was $385,500 last year. That was the nation’s third highest.
So, that high value translated to a typical California tax payment of $3,104 a year, or the 11th worst among the states.
You can dream about paying a common Alabama levy at $543, or be thankful the mailbox doesn’t contain a bill for a typical property in New Jersey ($7,410), Connecticut ($5,327), or New Hampshire ($5,100.)
But I took this math exercise further because I wanted to see how much of an average family’s cash goes toward property taxes.
My trusty spreadsheet tells me that when you compare California’s median household income of $64,500 – 10th best nationally – to property tax bills, you find the burden equals 4.8 percent of the household pay. That share ranked 10th worst among the states. (Psst! Texas was 12th worst at 4.6 percent.)
Want to pay less? Move to the national low in Alabama where these taxes run 1.2 percent of incomes.
Want to feel better? Imagine paying property taxes in New Jersey (10.3 percent); my home state of New York (7.6 percent); or Connecticut (7.5 percent)!
So maybe it’s not just California’s fine weather that draws so many transplants from the Northeast!