Personal Finance

Where property taxes hit hardest

State tax systems 'fundamentally unfair': New study
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State tax systems 'fundamentally unfair': New study

Do your property taxes seem unreasonably high? Unless you live in New Jersey, they could be worse.

The Garden State takes the dubious award for highest property taxes in the country, according to a survey by WalletHub, with the average property tax levy in that state a hefty $3,971 per year. Also near the top of the list are Illinois, New Hampshire, Wisconsin, Texas and Connecticut.

The typical New Jersey tax bill is more than eight times the average property tax bill in Hawaii, the state with the lowest property taxes, which clocks in at $482 per year. Hawaii is unusual in that it takes in so much tax revenue from tourists and tourism in the form of sales and excise taxes. But Louisiana and Alabama, next on the list, have average annual property taxes of $752 and $832, respectively, which is also just a fraction of a New Jersey tax bill.

It's not the first time New Jersey has topped this list. "New Jersey has always relied heavily on its property taxes," said Jill Gonzalez of WalletHub.

Read MoreHere's who's stuck with the biggest tax bills

Highest and lowest state property taxes

(Above infographic courtesy of WalletHub.)

New Jerseyans are concerned about their tax burden. A survey released in November by the Monmouth University Polling Institute found that half of its residents want to move out of the state at some point. Property taxes were the most commonly cited reason, followed by the general cost of living.

"Many New Jerseyans are saying, 'I don't think this is getting any better, so why don't I just pay with my feet,' " said Patrick Murray, director of the institute.

AMT worries

Palmer Square in Princeton, N.J.
Bruce Yuanyue Bi | Lonely Planet Images | Getty Images

People in high property tax states have more reasons to worry. Several of those states also have more residents with high incomes—New Jersey and Connecticut were near the top of another survey measuring states' wealth—and taxpayers with high incomes and high state and local taxes are especially vulnerable to the alternative minimum tax, or AMT.

The AMT was designed to level the tax playing field and prevent wealthy taxpayers from using loopholes and deductions to avoid paying taxes. But because the income brackets for the tax were not permanently indexed to inflation until 2012, the reach of the tax kept extending, well beyond the ultrarich.

Read MoreThe alternative minimum tax changes: CNBC explains

Even with the indexing, families who have high incomes but live in high-tax areas, such as New Jersey and Connecticut, are more likely to be hit by the tax, even though they may not feel especially wealthy.

High property taxes benefit schools

There is a flip side to these high-tax burdens. States with high taxes tend to spend more on public services, such as schools, parks, and fire and police departments.

Alabama, which had the second-lowest property taxes, spent $8,813 per student on education in fiscal 2011, and Louisiana, with the third-lowest property taxes, spent $10,723, according to Census Bureau data. New Jersey, meanwhile, spent $15,968, and Connecticut spent $15,600.

Read MoreClaim these money saving tax breaks while you can

Schools and parks are great to have, no doubt. But when the taxman cometh, there is a price to be paid.