High Property Taxes: Illinois Nearly Tops List In U.S.

You know it, you've heard it: Illinois has high property taxes.

Many blame that for fleeing to Florida or Texas, although the warmer temps don't hurt.

According to a new study, Illinois has the second-highest effective property tax rate in the nation, only behind New Jersey.

The effective property tax rate is the percentage of a property's market value that is forked over in taxes annually.

In Illinois, that rate is 2.1 percent, which is just under New Jersey's 2.2 percent, according to the PropertyShark study.

But Texas is also near the top of the chart. It is the seventh-highest at 1.6 percent. That's higher than Wisconsin's 1.5 percent and California's .7 percent.

But Texas, like Florida, has no income tax. Meanwhile, Illinois' state income tax rate is nearly 5 percent.

Texas' sales taxes are on par with Illinois. But Illinois does not tax services, while Texas does, with exceptions.

So why are Californians leaving for Texas?

"It appears they are fleeing California because of the highest income tax rate in the country," Bill Dare, an Oklahoma State University associate professor of finance, said on PropertyShark's website. "So other factors are at play that outweigh property tax as a deciding factor. In other words, they must tax you somehow, and you have to look at the whole 'nest' of taxes to figure out if that state is the one you want to build your nest in."

Christopher Berry, a University of Chicago public policy professor, said factors other than property taxes are seen as more important, such as job, family and local amenities.

Taxes play more of a role when picking among towns in a region, he said.

"Once you have decided to move to the Chicago region, for example, there are many different municipalities and school districts available," Berry said. "Property taxes will be a big consideration when choosing among them."

Hawaii has the lowest effective property tax rate at .3 percent. It also has a relatively low sales tax at 4 percent.

"So why isn’t everyone moving there?" Dare said. "Hawaii has an 11% income tax (ouch)."

Here are the highest effective property tax rates:

Here are the lowest effective property tax rates:

Source: PropertyShark