According to the Tax Foundation’s analysis report for the year 2023, New Jersey has the highest property tax rate as a percentage of home value among all 50 states in the United States.
New Jersey has a total of 564 municipalities, all of which levy property taxes, often referred to as property taxes. Residents have been complaining about the high cost of living, especially after retirement. Governor Murphy proposed a 50% reduction in property taxes for seniors aged 65 and above. However, property tax is essentially a service fee, serving as the primary source of funding for services such as schools, roads, police, fire, and emergency medical services. Recently, the state legislature introduced a bill allowing school boards to increase taxes by more than 2% annually to avoid layoffs due to reductions in state education aid.
Many experts believe that the best way to maintain lower property taxes is to keep services at a minimum. For example, Walpack Township in Sussex County had only 7 residents according to the 2020 census, with about 3/4 of its few houses being seasonal residences requiring minimal services. With no school or municipal taxes, the property tax in Walpack was low, averaging only $456 in 2023.
In contrast, other towns in Sussex County had balanced tax rates of over 2% in 2023. Hamburg had the highest rate at 3.261%, primarily due to high school taxes. Branchville, Frankford, and Lafayette had tax rates around 2.1%.
The average home price in a town is closely related to its property tax rate. High tax rates can lower property prices as a drawback, while low tax rates can increase property prices and market valuations.
Alpine Town in Bergen County is filled with multimillion-dollar mansions, but it has one of the lowest tax rates in Bergen County, being one of the three towns with a balanced tax rate below 1% in 2023. Comparatively, buying a house in Alpine could save over $10,000 in property taxes compared to towns with similar home prices. Although Alpine’s average home price is $1.95 million higher than Demarest Town, its average property tax of $21,700 is lower than Demarest’s approximately $23,500.
Rockleigh Town had an average home price of $1.63 million, ranking second in Bergen County, with property taxes around $12,600 in 2023. Despite being one of the towns with the highest child-rearing ratios, Rockleigh also has a relatively high proportion of retirement-age residents, resulting in lower school taxes. Other towns suitable for retirees due to low school taxes include Cape May Point in Cape May County and Mantoloking in Ocean County.
Harding Township in Morris County is another example of high home prices and low property taxes. With an average home price of $1.29 million, the highest in the county, Harding Township has a balanced property tax rate below 1%. Other towns in Morris County with relatively low balanced property tax rates include Florham Park, Madison, and Hanover, with average home prices in the moderate range.
The towns in Passaic County had similar balanced tax rates in 2023, with Prospect Park, the smallest town, having the highest rate at 2.921% due to the town’s limited economy hindering efficient service provision. Totowa, a medium-sized town in Passaic County, had the lowest effective tax rate at 1.593%, with the highest average property value estimation of approximately $402,000.
Millburn in Essex County had the highest average home price, but due to relatively lower school and municipal taxes, it also had the lowest effective tax rate.