How Property Tax and Sales Tax Affect Your Total Tax Rate

A sensitivity analysis, not a state ranking

The rows below hold a $100,000 single W-2 Texas household constant: no dependents, $1,800 monthly rent in the renter baseline, 500 gallons of fuel, and no actual-tax overrides. One variable changes at a time. Every row uses a $5,000 average exposed money balance. Actual property-tax scenarios replace the renter estimate with the stated property-tax bill.

Sources for this table: Tax Foundation: state and local sales-tax rates, midyear 2025; Tax Foundation: property taxes by state and county, 2024 ACS data; Zillow Research housing data; Federal Reserve Bank of Philadelphia Working Paper 25-41; IRS Revenue Procedure 2024-40; Social Security Administration contribution and benefit base. The baseline renter property line uses 2025 Zillow ratios, 2024 ACS effective rates, and a 70% pass-through midpoint; the owner rows use the stated actual bill instead.

Why actual values matter

Property taxes are usually a known annual bill for owners. Entering that bill avoids substituting a broad location estimate. Sales tax is more difficult to observe because purchases can be exempt, taxed at different rates, or bundled into receipts, so a categorized spending record is stronger than a generic spending percentage.

Neither category should be used to claim that one place is universally cheaper. Home value, taxable purchases, local rates, and household behavior are different for every person.

How the renter property-tax estimate works

A renter does not receive the landlord's property-tax bill, but property tax is one cost of supplying rental housing. When monthly rent is entered, TrueTaxRate first annualizes the rent and multiplies it by a rounded state price-to-rent ratio derived from Zillow housing data. It then applies the state's effective owner-occupied property-tax rate and a 70% pass-through midpoint.

Embedded property tax = annual rent × price-to-rent ratio × effective property-tax rate × pass-through factor

The result is labeled low confidence and includes a 50%-89% sensitivity range based on cited new-tenant research. The study does not establish one national rate, and the state price-to-rent ratio cannot capture the exact building, assessment, landlord, rent-control status, or local exemption. Entering rent therefore produces a directional embedded property estimate, not a claim that a particular tax dollar was separately charged to the tenant.

Why taxable spending matters more than gross spending

A household's total purchases are not necessarily its taxable purchases. Groceries, medicine, services, clothing, digital products, and business purchases receive different treatment across states and cities. The sensitivity rows change only the amount designated as taxable spending and apply the modeled combined rate. They do not assume that every dollar leaving a bank account is subject to sales tax.

This distinction is why a categorized transaction export can improve the estimate. A state-average rate applied to a rough annual spending number is useful for scale, while receipt-level tax paid is stronger evidence. The table also shows that property and sales taxes affect the numerator of TrueTaxRate directly: with gross income held at $100,000, each additional $1,000 of tax changes the displayed rate by one percentage point.