Property Taxes by State: Which States Have the Lowest Tax Rates?
Why Property Taxes Matter So Much
On a $400,000 home, the difference between a 0.5% property tax state (like Hawaii) and a 2.5% state (like New Jersey) is $8,000 per year — $667 per month — a significant portion of most households' budgets. Over 30 years, this represents nearly a quarter million dollars.
States with the Lowest Property Tax Rates
- Hawaii: 0.27% effective rate — America's lowest
- Alabama: 0.37% — very low despite low home values
- Louisiana: 0.51% — Homestead exemption helps
- Wyoming: 0.56% — Benefits from energy severance taxes
- Colorado: 0.51% — Constitutionally limited Gallagher Amendment
States with the Highest Property Tax Rates
- New Jersey: 2.47% — America's highest
- Illinois: 2.08% — Especially high in Chicago suburbs
- Texas: 1.63% — High property taxes offset no income tax
- Connecticut: 1.73% — Combined with high home values, very expensive
- Vermont: 1.81% — Significant burden for rural homeowners
Effective Tax vs. Tax Rate: What You Actually Pay
Tax rates apply to assessed value, which varies widely. Some states assess at 100% of market value; others at 50% or less. Compare effective tax rates (actual taxes paid divided by market value) for true comparisons. ZipScore incorporates property tax context into our affordability scoring.
How to Factor Property Taxes Into Your Home Purchase
Always calculate the annual property tax bill before committing to a purchase. Ask the listing agent for the exact current year's tax bill. Calculate it as a monthly cost and add it to your mortgage payment to get the true housing cost.