The average American homeowner hands over thousands of dollars a year to local governments to cover property taxes. You write that check, whether you just bought your house or paid off the mortgage a decade ago. It is a recurring expense that heavily influences where people choose to settle down, and depending on your ZIP code, that tax bill can be a minor annoyance or a massive financial strain.
Where you live dictates just how painful that bill is. Residents in some states pay barely anything, while others shoulder tax burdens that rival a second mortgage.
Analysts at WalletHub evaluated all 50 states and the District of Columbia to determine the effective real estate tax rates across the country. They looked at the taxes paid relative to total home value to find exactly who gets hit the hardest — and who gets a break.
Why the lowest rate does not guarantee the cheapest bill
A low percentage looks great on paper, but your actual bill depends entirely on the value of your home. Everything from local amenities to how political signs affect property value can play a role in that final assessment.
Hawaii is the perfect example. It boasts the lowest effective tax rate in the country. However, the median home value in Hawaii is far higher than the national average. When you apply that tiny 0.27% rate to a massive home valuation, the actual tax bill climbs quickly. The typical Hawaii homeowner pays several thousand dollars a year in property taxes.
Contrast that with Alabama, which has the second-lowest effective tax rate at 0.38%. Because the median home value in Alabama is much lower than the national average, the average homeowner there pays less than $1,000 a year. That makes Alabama the cheapest state for property taxes in terms of actual cash out of pocket.
The 10 states with the lowest property taxes
Homeowners looking for relief from heavy tax burdens will find the most favorable rates in the South and the West. These 10 states have the lowest effective property tax rates in the country.
The estimates below reflect the annual tax on a home priced at the national average of $332,700.
- Hawaii: At just 0.27%, this state has the lowest effective property tax rate in the country. On an average-priced home, you would pay $888 a year.
- Alabama: With a rate of 0.38%, homeowners here pay some of the lowest raw amounts in the nation. The tax on an average home is $1,249.
- Nevada: A 0.47% tax rate keeps property costs manageable for residents, totaling $1,549 on an average home.
- Arizona (tie): Homeowners face an effective rate of 0.48%, resulting in a $1,585 annual bill.
- Colorado (tie): Matching Arizona, the rate sits at 0.48%, costing homeowners $1,605.
- South Carolina (tie): The final state in this three-way tie also charges 0.48%, which translates to $1,607 annually.
- Idaho: The effective property tax rate is 0.49%, leaving homeowners with a $1,620 bill.
- Delaware (tie): Residents pay an effective rate of 0.50%, or $1,671 on an average home.
- Tennessee (tie): Matching Delaware, the rate is exactly 0.50%, leading to a $1,673 tax bill.
- Utah: Rounding out the bottom ten, the state levies a 0.52% rate, costing $1,717 annually.
The 10 states with the highest property taxes
Living in the Northeast or parts of the Midwest comes with a steep premium. These states levy the heaviest property tax burdens on their residents.
- Iowa: Closing out the most expensive ten, homeowners pay a 1.39% rate, resulting in a $4,634 bill on an average home.
- Wisconsin: The state levies a 1.42% effective property tax rate. The annual tax sits at $4,734.
- Texas (tie): The state charges an effective rate of 1.49%, costing homeowners $4,961.
- Nebraska (tie): Tied with Texas, residents also pay 1.49%, translating to a $4,949 bill.
- New York: The effective rate sits at 1.55%, leaving residents with a $5,167 tax burden.
- Vermont: Homeowners face a 1.59% effective tax rate, which equates to $5,295 annually.
- New Hampshire: The state offsets its lack of income tax with a high 1.66% property tax rate, costing $5,511.
- Connecticut: Residents pay a steep 1.81% rate on their homes, resulting in a $6,024 bill.
- Illinois: A close second, the state charges an effective rate of 2.01%, leaving homeowners paying $6,694.
- New Jersey: Leading the nation, homeowners here face a staggering 2.11% effective property tax rate. On an average home, the bill eclipses $7,022.
Looking at the total tax picture
You cannot make housing decisions based on property taxes alone. States need to fund their schools, roads and emergency services somehow. If a state does not collect that money through property taxes, it will find it elsewhere.
Many states with low property taxes charge high income taxes or sales taxes to make up the difference. Conversely, states with brutal property tax bills often give residents a break in other areas. New Hampshire has some of the highest property taxes in the country, but it does not charge a general sales tax or a state income tax on wages.
Before you pack up and move across state lines to escape a painful property tax bill, you must calculate the total cost of living. Look at the state income tax, the local sales tax, and the everyday cost of goods. A cheaper tax bill means nothing if your overall housing and living expenses consume your entire budget.