Differences in property taxes across states vary significantly. In this article, we will delve into the reasons behind this variation, the methods used to calculate property taxes, and potential strategies to lower your own. By reading through to the end, you should have a good understanding of property tax mechanics.
Verify your home buying eligibility. Start hereIn this article:
- What are property taxes?
- Property taxes by state
- How are property taxes calculated?
- Tips for lowering property taxes
- Property taxes FAQ
What are property taxes?
Most of us are all too familiar with property taxes. They’re the money you pay annually or monthly to your county or city government for the privilege of living in your home.
Verify your home buying eligibility. Start hereMuch of the revenue is passed on to the state government. But extra amounts may be levied by your county, municipality, township, school district or some special-purpose fund known as a special district.
And property taxes are a lot. The Tax Foundation, a nonpartisan nonprofit, reckons that property taxes accounted for 32.2% of total state and local tax collections nationwide in the 2020 fiscal year.
It continued: “Local governments rely heavily on property taxes to fund schools, roads, police departments, fire and emergency medical services, and other services associated with residency and property ownership.”
What decides how much you pay
The amount you pay is determined by three factors:
- The value of your home as decided by your local assessor’s office
- Your state’s property tax rate, which in 2023 varied between 2.49% in New Jersey and 0.28% in Hawaii
- Any additional property taxes levied by your county, municipality, school district and so on
We’ll dig deeper into how your property taxes are determined a little later in this article.
Property taxes by state
Here’s a list of property taxes by state, plus the District of Columbia, ranked from the lowest to the highest.
Verify your home buying eligibility. Start here| State |
Property tax rate | Ave. home price in state (Q1/23) | Ave. 2023 property tax | |
| 1 | Hawaii | 0.28% | $615,300 | $606 |
| 2 | Alabama | 0.41% | $142,700 | $895 |
| 3 | Colorado | 0.51% | $343,300 | $1,113 |
| 4 | Louisiana | 0.55% | $163,100 | $1,187 |
| 5 | D.C. | 0.56% | $601,500 | $1,221 |
| 6 | South Carolina | 0.57% | $162,300 | $1,238 |
| 7 | Delaware | 0.57% | $251,100 | $1,240 |
| 8 | West Virginia | 0.58% | $119,600 | $1,269 |
| 9 | Nevada | 0.60% | $267,900 | $1,310 |
| 10 | Wyoming | 0.61% | $220,500 | $1,319 |
| 11 | Arkansas | 0.62% | $127,800 | $1,358 |
| 12 | Utah | 0.63% | $279,100 | $1,362 |
| 13 | Arizona | 0.66% | $225,500 | $1,446 |
| 14 | Idaho | 0.69% | $212,300 | $1,492 |
| 15 | Tennessee | 0.71% | $167,200 | $1,548 |
| 16 | California | 0.76% | $505,000 | $1,644 |
| 17 | New Mexico | 0.80% | $171,400 | $1,740 |
| 18 | Mississippi | 0.81% | $119,000 | $1,751 |
| 19 | Virginia | 0.82% | $273,100 | $1,779 |
| 20 | Montana | 0.84% | $230,600 | $1,818 |
| 21 | North Carolina | 0.84% | $172,500 | $1,833 |
| 22 | Indiana | 0.85% | $141,700 | $1,853 |
| 23 | Kentucky | 0.86% | $141,000 | $1,866 |
| 24 | Florida | 0.89% | $215,300 | $1,934 |
| 25 | Oklahoma | 0.90% | $136,800 | $1,952 |
| 26 | Georgia | 0.92% | $176,000 | $2,006 |
| 27 | Missouri | 0.97% | $157,200 | $2,111 |
| 28 | Oregon | 0.97% | $312,200 | $2,116 |
| 29 | North Dakota | 0.98% | $339,900 | $2,138 |
| 30 | Washington | 0.98% | $193,900 | $2,134 |
| 31 | Maryland | 1.09% | $314,800 | $2,370 |
| 32 | Minnesota | 1.12% | $223,900 | $2,429 |
| 33 | Alaska | 1.19% | $270,400 | $2,599 |
| 34 | Massachusetts | 1.23% | $381,600 | $2,667 |
| 35 | South Dakota | 1.31% | $167,100 | $2,857 |
| 36 | Maine | 1.36% | $190,400 | $2,953 |
| 37 | Kansas | 1.41% | $151,900 | $3,060 |
| 38 | Michigan | 1.54% | $154,900 | $3,343 |
| 39 | Ohio | 1.56% | $145,700 | $3,390 |
| 40 | Iowa | 1.57% | $147,800 | $3,407 |
| 41 | Pennsylvania | 1.58% | $180,200 | $3,442 |
| 42 | Rhode Island | 1.63% | $261,900 | $3,548 |
| 43 | New York | 1.72% | $313,700 | $3,749 |
| 44 | Nebraska | 1.73% | $155,800 | $3,754 |
| 45 | Texas | 1.80% | $172,500 | $3,907 |
| 46 | Wisconsin | 1.85% | 180,600 | $4,027 |
| 47 | Vermont | 1.90% | $227,700 | $4,135 |
| 48 | Connecticut | 2.14% | $275,400 | $4,658 |
| 49 | New Hampshire | 2.18% | $261,700 | $4,738 |
| 50 | Illinois | 2.27% | $194,500 | $4,942 |
| 51 | New Jersey | 2.49% | $335,600 | $5,149 |
Source: ATTOM Data Solutions
Why these vary so much from state to state
Looking at property taxes by state raises questions, perhaps most obviously: Why such wide variations?
And there are various answers. Some state governments might spend their revenues more or less efficiently than average. Others could invest more or less in their public services and infrastructure. Yet others may choose to raise their real estate taxes in different ways: perhaps through a higher or lower state sales tax or income tax rate than others. And some receive bigger grants than others from the federal government.
You might be more inclined to move to a state with low property taxes. But you should investigate those other factors, too, before you decide.
How are property taxes calculated?
So, property taxes are largely dependent on how your state and local governments choose to spend their taxpayers’ money and raise revenues. They may decide how much they need to raise to meet their budgets, look at the assessed median home values in their area, and then calculate the effective property tax rate they need to make the math work.
Verify your home buying eligibility. Start hereBut how the value of your home is assessed can also have a big effect. Some states base their assessments on the full market value of your home. Others assess only a proportion of it. And some states update their assessments annually while others do so less frequently, up to once a decade in some places.
FindLaw.com explains: “To calculate the market value of a piece of property, an assessor will determine if there have been changes in the real estate market where the property is situated. The assessor will examine what different types of property are selling for, local construction costs, normal operating expenses like utilities, nearby rental rates, and inflation. Changes in these factors may change the assessed value of the property.”
Most states offer property tax exemptions for certain groups of residents. These tend to focus on veterans, senior citizens and disabled people.
However, the rules vary for exemptions almost as much as rates of property taxes by state do. Luckily, the National Association of Counties publishes A Look at Exemptions, Tax Limits and Assessment Cycles, which sets out each state’s policies.
Tips for lowering property taxes
Property taxes are one of the hardest taxes to dodge. Your home is there for everyone to see. You really can’t hide it under your mattress.
Verify your home buying eligibility. Start hereWe can think of only four ways to manage your property tax liabilities:
- Make sure you claim any exemptions to which you’re due. Check your state and local governments’ rules to make sure you pay the minimum possible. And read How to Claim Your Senior Property Tax Exemption
- Challenge the assessment of your property’s value. Assessors make mistakes and there should be an appeals process. But expect a fight unless you have a strong case
- See if your local government offers a discount for annual rather than monthly tax payments. You might save a few bucks.
- Avoid adding to the value of your home unnecessarily. An expensive in-ground pool or remodeling could add to your property tax bills. However, if you can afford those investments, those bills may be more of an irritant than a disaster. And home improvements can add to your net worth
Your state and local governments need property taxes to pay for things we all value. But none of us needs to pay more than is due under the law.
The bottom line
Nobody likes paying taxes. But property taxes pay for stuff we need. And you’ll struggle to avoid or evade them. So, you might as well grit your teeth and pay up.
How much you pay will largely depend on how your state and local governments choose to raise revenues and how much they decide to spend. So, property taxes by state vary widely. But you’ll have to campaign for different political candidates if you want to change those things.
Still, you might get smaller bills if you’re entitled to an exemption, appeal against your assessment, or pay annually instead of monthly. You’ll have to check your local rules to see how to go about these things.
While many people pay only a small fraction of their mortgage costs on property taxes, you should be aware of your likely bills before you buy a home. In some cases, they could be decisive to your ability to afford your homeownership costs. When you use our mortgage calculators, we include property tax and homeowners insurance estimates as well as mortgage payments in the figures you’ll see.
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Property taxes FAQ
Which state has the highest property taxes?
New Jersey has the highest rate for property taxes at 2.49%. But don’t forget the value of the home plays at least as important a part in the bills you’ll get. And a wildly expensive mansion in Manhattan or San Francisco might have a higher liability than a comparably sized home in New Jersey.
Which state has the lowest property taxes?
Hawaii has the lowest property tax rate at 0.28%. But, again, home prices tend to be high there.
How are property taxes assessed?
Your local government will employ a professional assessor who will determine your home’s market value. Your state will have laws that define how often that has to be updated and how much of the value is used when calculating your liability.
Can I lower my property taxes?
Maybe. You certainly can if you’re eligible for an exemption under your state’s laws. And you might be able to if you appeal the value your assessor put on your home. Sometimes, you may get a discount for paying annually instead of monthly.
