Residents of New Jersey and New York City face some of the highest tax burdens in the U.S., and property tax rates are no exception. These high tax bills stem not only from the high cost of real estate in this area, but also from relatively high tax rates compared to many other parts of the country. Whether you're considering a move to this region or simply looking to lower your current tax bill, understanding the property tax rates in each of these areas can help you plan a budget or even decide between two properties.
New Jersey Property Taxes
Each local municipality in New Jersey sets its own property tax rate, so taxes can vary by county, or even within the same county. In Hudson County, the effective property tax rate varies from 1.452 to 2.952 percent, and from 1.710 to 3.638 percent in nearby Essex County as of 2011. Effective property tax rates in Union County range from 1.732 to 17.267, while rates in Middlesex County vary from 1.756 to 2.753.
New York City Property Taxes
In New York City, property taxes are calculated based on the assessed value of a property. First, tax assessors determine the fair market value of the property based on the value of similar properties in the area. The assessed value of the property was equal to 6 percent of this market value as of 2012. Tax assessors can increase the assessed value of a property by a maximum of 6 percent per year, or no more than 20 percent over 5 years. For Class 1 properties, which includes residential properties housing one to three families, the tax rate is 18.569 percent for 2012 to 2013. Thanks to the method by which property taxes are calculated based on assessed rather than market value, this tax rate equates to roughly a 0.67 percent effective tax rate as of 2011, according to the Furman Center for Real Estate and Public Policy.
Median Property Tax Payments
According to the Tax Foundation, residents in many New Jersey counties paid some of the highest median tax payments in the U.S. over the 5-year period 2005 to 2009. Essex County ranked 6th on the list, with a median property tax payment of $7,489. Union County ranked 9th with median payments of $7,075, while Hudson County ranked 14th at $6,085. Middlesex County took the 20th spot on the list, with median tax payments of $5,892 over the 5-year period. When you consider just median tax payments, New York City residents enjoyed a much lower tax burden. Five separate counties make up New York City, including New York County, Richmond County, Bronx County, Queens County and Kings County. New York County ranked 61st on the list of highest property tax burdens from 2005 to 2009, with a median property tax payment of $3,921. Richmond County ranked 190th, at $2,655 per year, followed by Queens County at $2,609. Kings County ranked 213th at $2,580, while Bronx County ranked 313th, at $2,191.
Property Tax Payments as a Percentage of Income
When you consider property taxes as a percentage of income, six New Jersey counties rank in the top 10, while a total of 14 rank in the top 20 most expensive counties in the U.S. Essex, Union, Hudson and Middlesex Counties, all located in close proximity to New York City, all ranked among the top 20 counties in the country in terms of median property tax payments as a percentage of income over the five-year period from 2005 through 2009. In Essex County, residents paid 8.04 percent of their incomes to cover property taxes from 2005 to 2009, while those in Union County paid 7.81 percent. Property tax payments in Hudson County amounted to 7.28 percent of income, while residents in Middlesex County paid 6.42 percent of their income to property taxes. New York City residents fared much better. Property taxes as a percentage of income ranged from a low of 2.88 in New York County to a high of 3.59 in Queens County, well under the rate in most New Jersey counties.
- The City of New York: Property Tax Rates
- State of New Jersey Department of the Treasury: General Tax Rates by County and Municipality
- The Tax Foundation: New York, New Jersey Lead Nation in Property Tax Burden
- The Tax Foundation: Property Taxes on Owner-Occupied Housing, by County, Ranked by Taxes Paid, 2005 - 2009 (five-year average)
- The Tax Foundation: Property Taxes on Owner-Occupied Housing, by County, Ranked by Taxes As a Percentage of Income, 2005 - 2009 (five-year average)
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