New Orleans: home to fabulous jazz and blues venues, Mardi Gras, Café du Monde’s famous beignets and Second Lines flowing through city streets on a daily basis. Beyond its infamously intoxicating atmosphere, however, lies the 50th largest city in the United States, home to nearly 400,000 residents. New Orleans enjoys one of the lowest property tax rates among large cities in America, enabling homeowners to enjoy their property without the onus of an enormous bill every year.
How Do You Calculate New Orleans Property Tax?
When you’re looking to buy a new home, understanding how much that property may cost you in various fees, bills and taxes throughout the year is an important factor. In New Orleans, the total property tax millage rate is 148.77 on the East Bank, and 149.66 on the West Bank. How that millage is actually applied to a home is a bit of an intricate process, however.
First, homeowners only pay taxes on 10 percent of the value of a home. That means that a $100,000 home would only have a tax assessment value of $10,000. Next, the millage is split into 2 assessments: 1 inclusive of a homestead exemption, for a majority of the taxing entities, and 1 exclusive of a homestead exemption, for a portion of police and fire coverage.
Let’s look at the portion assessed against a home with a homestead exemption applied. The exemption removes $7,500 of the taxable value. Removing the police and fire portion of the taxes, a total millage of 138.3 (East Bank) or 139.19 (West Bank) is applied to the remaining value. For a $100,000 property, that would equal $345.75 in yearly taxes on the East Bank ($2,500 x 0.1383), or $347.98 on the West Bank ($2,500 x 0.13919).
That leaves a police and fire assessment of 10.47, which is applied to the total taxable value of the property without applying a homestead exemption. The same millage is applied to both the East Bank and the West Bank for this piece of the assessment, equating to $78.53 ($7,500 x 0.1047). Completing the equation, the total taxes on a $100,000 home on the East Bank per year are $424.28 versus $426.51 on the West Bank.
The FAQ section of the Orleans Parish Assessor’s Office provides additional guidance and explanation for all matters concerning property taxes and tax assessments, including tax rates set from 2014. Some districts with New Orleans also pay additional taxes for projects including capital improvements and revitalization projects, which can raise the year property tax amount paid per $100,000 home by $100 to $200 dollars.
How Does New Orleans Compare to Other Large Cities?
Including special taxes levied in portions of New Orleans, most homeowners in Orleans Parish pay about .64% of their home’s value per year in taxes. An interactive per-year property tax graphic compiled by CNN Money shows that the percentage of value paid by New Orleans homeowners is one of the lowest among heavily populated cities in the United States. Let’s look at some comparisons.
Wichita, Kansas, the 49th largest city in the United States, which is only marginally more populated than New Orleans, is located in Sedgwick County. Residents in this county pay, on average 1.26% of their home’s value, about twice as much as New Orleans.
Arlington, Texas, the 50th largest city in the United States and just a bit smaller than New Orleans, is located in Tarrant County, where property taxes assess at 2.34% of a home’s value. This is slightly higher than neighboring Dallas County, where Dallas is both the county seat and 9th largest country in the United States. Taxes in Dallas County average 2.18% of the property’s assessed value.
Use these additional city property tax percentage comparisons to fully appreciate how economical taxes are in New Orleans.
- Cleveland, Ohio (Cuyahoga County, 48th largest city): 2.02%
- Oakland, California (Alameda County, 45th largest city): 0.75%
- Atlanta, Georgia (Fulton County, 39th largest city): 1.11%
- Las Vegas, Nevada (Clark County, 29th largest city): 0.81%
- Tampa, Florida (Hillsborough County, 53rd largest city): 1.13%
Why Do Property Taxes Vary Wildly Throughout the United States?
So many variables go into calculating property taxes throughout the country. One key is whether or not a state collects income taxes. In Louisiana, residents pay 2% income tax on the first $12,500 of earned income, another 4% on income between $12,500 and $50,000, and an additional 6% on income over $50,000. Because the state is able to generate revenue from income taxes, counties throughout the state are able to enjoy lower property taxes.
In comparison, Texas residents pay no personal income taxes. Therefore, in order to generate revenue for government agencies and resources, property taxes are higher in Texas. In other states, sales taxes and business taxes are a variable that determines the rate of assessment applied to property values when those taxes are collected.
Additional variables include how funds are generated for public school systems, how many federal dollars versus state or local dollars are applied to capital improvement products, or if a city, like New Orleans, has the appeal to draw in many visitors from whom additional resort or sales taxes can be drawn.
As a homebuyer, another consideration to take into account when looking at New Orleans properties and associated property taxes is whether or not you will escrow taxes each month as a part of your mortgage payment or if you’d prefer to pay taxes out of pocket each year instead. Because of New Orleans’ lower tax assessments, it is one of the few areas of the country where paying property taxes out of pocket is a possibility.
2 Point Highlight
- New Orleans enjoys one of the lowest property tax rates among large cities in America, enabling homeowners to enjoy their property without the onus of an enormous bill every year.
- Including special taxes levied in portions of New Orleans, most homeowners in Orleans Parish pay about .64% of their home’s value per year in taxes.
