Michigan households are paying substantially more in real estate property tax and substantially less in vehicle property tax each year compared to the rest of the U.S., according to a report compiled by WalletHub. The website, which specializes in finance recommendations and often conducts rankings reports, found in its 2015 Highest and Lowest Property Taxes report that Michigan is 44th in the nation for lowest real estate taxes and 26th nationwide for lowest vehicle property taxes.
At $3,168, the average household payments for real estate property taxes in Michigan is just $803 less than New Jersey, ranked the lowest in WalletHub’s report.
The average U.S. household spends $2,089 on real estate property taxes per year, the report found.
But when it comes to the 27 states that require vehicle property taxes, the report found that only Montana beats Michigan as the lowest average, with Montana residents averaging $85 and Michigan residents averaging $110.
The total average payment of residents of states with vehicle property taxes is $423. Michigan ranks 26th in the report because all of the states that do not charge property taxes on vehicles tied for 1st with a $0 average.
WalletHub spokesperson Jill Gonzalez said the company deems Michigan a progressive state when it comes to taxation, especially considering the recent elimination of the business property tax on manufacturing equipment.
While the change has considerably helped businesses, the change hasn’t necessarily translated into a savings for Michigan residents, she said.
“Michigan has more of a progressive tax system, relying less on sales and excise taxes,” she said. “Of course, it’s then going to have to rely more so on property taxes and personal income tax.”
The report also found that for the lowest 20 percent of earners in Michigan, 1.8 percent of the household’s total income goes towards property taxes. The top 4 percent of earners shelled out roughly 1.6 percent of their income.
In the percentile of earners deemed middle class, however, the percentage of income going towards property taxes ranged from 2 to 3 percent of total income, a trend Gonzalez noted isn’t unique to Michigan.
“In Michigan, as well as most other states in the U.S., property taxes are really hurting that middle income set the most,” she said.
WalletHub compiled the report using data from the U.S. Census Bureau and each state’s Department of Motor Vehicles.