Palo Alto Tops U.S. Cities for Highest Property Tax Bills

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A new report finds that Palo Alto residents pay the highest median property taxes in the nation at $23,007 per year, far above the national median of $3,211. Several other Peninsula cities also rank among the highest property tax bills, reflecting a broader trend of property taxes becoming the fastest-growing source of state and local revenue nationwide.

Why it matters

The high property taxes on the Peninsula highlight the affordability challenges facing homeowners in high-cost markets, even with relatively low effective tax rates. California's Proposition 13 limits annual assessment increases, shielding longtime residents but also creating disparities between them and new buyers.

The details

Palo Alto's median home price now exceeds $3 million, making property taxes a major cost of homeownership. The city's effective property tax rate of 0.657% is below the national average of 0.888%, but its median annual tax bill is still the highest in the U.S. Other Peninsula cities like San Mateo, Mountain View, and Redwood City also rank among the nation's highest property tax bills.

• The new analysis by Construction Coverage examined tax data from 651 cities across the nation.
• From 2022 to 2024, property tax collections rose by more than $96 billion nationwide, outpacing gains in other tax revenue sources.