10 Best States for Property Taxes-and Why

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10 Best States for Property Taxes-and Why

Local governments rely heavily on property taxes to support initiatives such as schools, road building and maintenance, parks and recreation programs, public transit, and payment for municipal workers such as police, firemen, and public works agencies.

Depending on where you reside, you may pay a little amount in property taxes or your tax bill may exceed your mortgage payment. According to statistics from the Tax Foundation, a tax policy research group, the mean effective property tax rate in the United States for 2019 was 1.03% (total real estate taxes paid divided by total house value). At 0.31%, Hawaii had the lowest rate in the nation. The highest incidence was 2.13% in New Jersey.

While most jurisdictions allow you to avoid paying property taxes if you satisfy certain standards, there isn’t a single state in the United States that doesn’t collect a minimum property tax.

Key Takeaways

  • Property taxes are levied by states and local governments annually, based on the assessed value of land and structures owned.
  • If you like to live on lots of land and in a big house, you may want to consider moving to a state with lower property tax rates to make it easier on your wallet.
  • The lowest effective property tax rate is 0.31% in Hawaii, while the highest is 2.13% in New Jersey.
  • Several other states, many of which are in the South, have property tax rates that are less than 1%.
  • Individual credits and exemptions are available in certain jurisdictions to qualifying homeowners, which may further lower the effective property tax rate.

10 Best States for Property Taxes

If you’re wondering how low property taxes may go, have a look at the list of the top ten best states for property taxes below. To assist put the tax rates into perspective, each state’s effective property tax rate, typical home value, yearly taxes on a home valued at the state’s normal value, and median family income are also included.

Typical house values are based on Zillow’s Home Value Index (ZHVI), a smoothed, seasonally adjusted measure of the projected home value for single-family homes (including condominiums and co-ops) throughout the United States as of January 2022. The American Community Survey data from the United States Census Bureau was used to calculate median household earnings.

1. Hawaii

  • 2019 Effective Property Tax Rate: 0.31%
  • The average home value in 2022 is $828,002.
  • Annual taxes on a home valued at the state average: $2,566.81
  • 2019 Median Household Income: $83,102

According to our study, Hawaii has the lowest effective property tax rate in the US as of the 2019 calendar year. Of course, it also has the highest average house value of the ten states on our list, which means that homeowners in this state may still face a significant tax burden. Despite having the highest median income of any state and the District of Columbia (second only to Washington, D.C.) in 2019, Hawaii also has the highest cost of living (as assessed by the Consumer Price Index (CPI)) as of 2021.

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2. Alabama

  • 2019 Effective Property Tax Rate: 0.37%
  • The average home value in 2022 is $189,976.
  • Annual taxes on a home valued at the state average: $702.91
  • 2019 Median Household Income: $51,734

Alabama has a low property tax rate as well as house prices that are far lower than the national average ($325,677 as of January 31, 2022), making it one of the most inexpensive states to be a homeowner. It’s also one of the most cheap states to live in overall, ranking third in the US in terms of cost of living in 2021. Alabama, on the other hand, has a comparatively high poverty rate in 2019, with 15.5% of its inhabitants living in poverty.

3. Louisiana

  • 2019 Effective Property Tax Rate: 0.51%
  • The average home value in 2022 is $203,222.
  • Annual Property Taxes on a House Priced at the State Typical Value: $1,036.43
  • 2019 Median Household Income: $51,073

Louisiana is another state on our list that has a low effective property tax rate as well as normal house prices that are much lower than the national average. In 2021, Louisiana’s gas tax was 20 cents a gallon, one of the lowest in the US, and its cost of living, though not the lowest, was still lower than that of 34 other states and the District of Columbia. Louisiana’s overall affordability, like Alabama’s, is offset by its high poverty rate of 19%, second only to Mississippi in 2019.

4. Wyoming

  • 2019 Effective Property Tax Rate: 0.51%
  • The average home value in 2022 is $303,325
  • Annual taxes on a home valued at the state average: $1,546.96
  • 2019 Median Household Income: $65,003

Wyoming’s average property value is higher than in some of the other states on our list, but there is no state income tax, and the state’s sales tax, at 4%, was one of the lowest in the US in 2021. Furthermore, although Wyoming had a modest cost of living in 2021, it also had a strong median family income and a lower poverty rate than the majority of states in 2019. Its overall gas tax is likewise on the low side, at 24 cents.

5. Colorado

  • 2019 Effective Property Tax Rate: 0.52%
  • The average home value in 2022 is $545,794.
  • Annual taxes on a home valued at the state average: $2,838.13
  • 2019 Median Household Income: $77,127
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Colorado has a low effective property tax rate, but higher house prices imply that homeowners will spend $2,838.13 on an average priced home—the second-highest tax burden (in dollars) of any state on our list. Of again, Colorado has the second-highest median family income on our list, which may make that tax payment appear more manageable. In 2019, the state has one of the lowest poverty rates in the country, at 9.3%.

6. South Carolina

  • 2019 Effective Property Tax Rate: 0.53%
  • The average home value in 2022 is $261,882.
  • Annual taxes on a home valued at the state average: $1,387.97
  • 2019 Median Household Income: $56,227

South Carolina and West Virginia share the same effective property tax rate of 0.53%, however South Carolina has a major advantage in terms of cost of living due to much lower mean house prices. In reality, with the exception of somewhat increased utility expenses, South Carolina’s other cost-of-living categories were quite low in 2021. However, like many other Southern states, its poverty rate was greater in 2019.

7. West Virginia

  • 2019 Effective Property Tax Rate: 0.53%
  • The average home value in 2022 is $126,948.
  • Annual Property Taxes on a Home Priced at the State Typical Value: $672.82
  • 2019 Median Household Income: $48,850

West Virginia’s low effective property tax rate and modest house values might result in the country’s lowest housing expenses. In 2021, the state’s total cost of living was in the top ten in the US, as was its gas tax rate. West Virginia’s poverty rate, at 16% in 2019, was much higher than the national average, as was its combined state and local sales tax rate of 7.46% in 2021.

8. Utah

  • 2019 Effective Property Tax Rate: 0.56%
  • The average home value in 2022 is $529,509.
  • Annual taxes on a home valued at the state average: $2,965.25
  • 2019 Median Household Income: $75,780

Utah has some of the highest property taxes on our list, due to a higher effective tax rate in 2019, as well as the highest average house prices of any of the 10 states featured here. Furthermore, its total sales and municipal tax rate, as well as its gas tax rate, are greater than most. On the good side, the state’s median household income was also higher in 2019.

9. Delaware

  • 2019 Effective Property Tax Rate: 0.59%
  • The average home value in 2022 is $332,115.
  • Annual taxes on a home valued at the state average: $1,959.48
  • 2019 Median Household Income: $70,176

Property taxes will most likely be higher in Delaware due to above-average normal house prices. Delaware also had a higher cost of living in all categories except utilities in 2021, and a moderate poverty rate in 2019. Nonetheless, Delaware had a higher median family income in 2019 and, as an additional benefit, no sales tax.

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10. Arkansas

  • 2019 Effective Property Tax Rate: 0.61%
  • The average home value in 2022 is $166,566.
  • Annual taxes on a home valued at the state average: $1,016.05.
  • 2019 Median Household Income: $48,952

A low effective property tax rate, along with low housing expenses, contributes to Arkansas’s appealing cost of living. Gas was taxed at 25 cents per gallon, significantly below the national average of 31 cents per gallon in 2021, while sales tax was on the high side, at 9.51% combined state and average local sales tax (the fourth highest in the country).

What 10 states have the lowest property taxes?

Hawaii (0.31%), Alabama (0.37%), Louisiana (0.51%), Wyoming (0.51%), Colorado (0.52%), South Carolina (0.53%), West Virginia (0.53%), Utah (0.56%), Delaware (0.59%), and Arkansas (0.61%) had the lowest property taxes in 2019.

What 10 states have the highest property taxes?

The 10 states with the highest property taxes in 2019 were New Jersey (2.13%), Illinois (1.97%), New Hampshire (1.89%), Vermont (1.76%), Connecticut (1.73%), Texas (1.60%), Nebraska (1.54%), Wisconsin (1.53%), Ohio (1.52%), and Iowa (1.43%), according to the Tax Foundation.

Are there any states with no property taxes?

Property taxes are levied in all 50 states and the District of Columbia. Some persons, however, may be eligible for a property tax exemption. Homestead exemptions are available in certain areas, while additional sorts of exemptions are available for elderly homeowners, individuals with disabilities, military veterans, and homeowners who undertake specific improvements or install renewable energy systems (e.g., solar panels).

The Bottom Line

Depending on where you reside, you may be eligible for a property tax exemption from your state, county, or municipal government. Some jurisdictions, for example, provide a homestead exemption, under which you don’t pay taxes on a percentage of your home’s value—say, the first $150,000—if you fulfill specific age or income conditions after the death of a homeowner spouse or the filing of a bankruptcy petition.

Other sorts of exemptions, such as those for elderly homeowners, individuals with disabilities, military veterans, and homes that make specified improvements or install renewable energy systems, such as solar panels, may be offered. Because these savings aren’t automatically applied to your tax statement, you need check with the agency that collects your property tax to see whether you qualify.

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