States With the Lowest — and Highest — Property Taxes

Benjamin Franklin once said, “In this world, nothing is certain except death and taxes.” If you buy a home, then you likely will have to pay property taxes — but tax rates vary depending on where you live.

Here’s a look at how property taxes work, and which states have the lowest and highest property taxes.

Property Taxes Explained

Homeowners pay property taxes to local governments to fund various public services like infrastructure, schools, and law enforcement. According to the Tax Foundation, property taxes serve as the largest source of revenue for state and local governments.

How property taxes are paid

You’ll typically pay property taxes as part of your monthly mortgage payment.

“Homeowners usually pay property taxes biannually or annually,” says Shannon Feick, co-owner and co-founder of ASAP Properties, a homebuying company in Cincinnati. “In most cases, these taxes are paid through an escrow account set up by their bank or mortgage lender.”

Once you completely pay off your home loan, your property tax bill will be mailed directly to you each year.

How to qualify for property tax exemptions

Unlike a tax deduction, which reduces your tax liability, some homeowners may qualify for a property tax exemption, which can lower your property taxes or get you out of paying them altogether. Property tax exemption programs typically are geared toward low-income or financially vulnerable homeowners like seniors, veterans, and people with disabilities. Eligibility requirements for these programs will vary depending on where you live.

How Property Taxes Are Calculated

The amount you pay in property taxes is based on the assessed value of your home, the portion of your home’s value that’s subject to taxation, and the property tax rate of the state and county you live in.

The assessed value of your home is different from its appraised value, though factors like property size and condition affect both. The assessed value is determined by government tax assessors to set your property tax bill. It’s often lower than the appraised value, which is a professional opinion on the fair market value of your home, resulting from a home appraisal.

Here’s how to remember the difference: The appraised value is how much it would cost to buy the home, and the assessed value is used to calculate how much you’ll have to pay in property taxes.

Once your home’s assessed value is ready, your local government will apply its assessment ratio, which is a set percentage of the value that will be taxed. Then, your property taxes will be calculated based on that amount.

For example, if a home’s assessed value is $400,000 and the assessment ratio is 70%, then your municipality’s property tax rate will be applied to $280,000.

10 States With the Lowest Property Tax Rates

Here’s a list of the 10 states with the lowest effective property tax rates in 2021, according to the most recent data available from the Tax Foundation:

1. Hawaii: 0.32%.
2. Alabama: 0.40%.
3. Colorado: 0.55%.
4. Wyoming: 0.56%.
5. Louisiana: 0.56%.
6. South Carolina: 0.57%.
7. West Virginia: 0.57%.
8. Utah: 0.57%.
9. Nevada: 0.59%.
10. Delaware: 0.61%.

While these states have relatively low property tax rates, it’s also important to factor in home prices and other expenses that influence the cost of living. For example, Hawaii may have the lowest effective property tax rate, but it’s very expensive to live in the Aloha State.

10 States With the Highest Property Tax Rates

Here are the 10 states with the highest effective property tax rates in 2021:

1. New Jersey: 2.23%.
2. Illinois: 2.08%.
3. New Hampshire: 1.93%.
4. Vermont: 1.83%.
5. Connecticut: 1.79%.
6. Texas: 1.68%.
7. Nebraska: 1.63%.
8. Wisconsin: 1.61%.
9. Ohio: 1.59%.
10. Iowa: 1.52%.

States in the Northeast and Midwest have some of the highest property taxes for a variety of reasons.

“There’s really four main reasons for higher property taxes in certain states: local school funding, public services and infrastructure, real estate market values, and/or limited revenue sources for your city, town, or state,” Feick says. “Plus, some states just have a bigger appetite for revenue than others.”

While higher property taxes can increase the cost of homeownership, there are other tax considerations. For example, Texas has a high effective property tax rate, but it doesn’t collect state income taxes.

Property Taxes in Every State

Here’s the effective property tax rate in every state, as well as where they would rank on a list of states with the highest property taxes, according to the most recent data available from the Tax Foundation:

How To Appeal Your Property Taxes

There are some cases where you may feel that the assessed value of your home is inaccurate. To avoid overpaying on your property tax bill, you could appeal your home’s assessed value. However, you’ll need to provide proof supporting your claim.

“You must have a good reason, or evidence, to appeal your property taxes,” Feick says. “Homeowners can typically request a reassessment or present evidence (like recent sales of comparable properties) to show that their home’s valuation is off the mark.”

The process of appealing your property taxes will vary based on where you live. The assessment of your home should contain information about how to file an appeal with your local government.

FAQ: State Property Taxes

Here are answers to some frequently asked questions about state property taxes.

The Bottom Line on State Property Taxes

If you become a homeowner, then you’ll need to pay property taxes, typically as part of your monthly mortgage payment. While all states have property taxes, the rate you’ll pay varies depending on where you live.