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States With The Lowest Property Tax

Property taxes can significantly impact your budget as a homebuyer, especially if you live in a state with high property taxes. That’s why it’s important to know the property tax by state before you make a decision to purchase a home.

Table of contents

Key Takeaways:...Read more

A brief intro to property taxes...Read more

States with the lowest property tax...Read more

New Jersey: The state with the highest property tax...Read more

How to pay property taxes...Read more

Key Takeaways:

There are no states with no property tax.
Hawaii, Alabama, Colorado, Nevada and Utah are the states with the lowest property tax.
New Jersey is the state with the highest property tax of 2.46%

A brief intro to property taxes

Property taxes play a big role in funding local services. Think schools, road maintenance and emergency services. When you own property—whether it’s your home, a rental property, or land—you’re responsible for paying a tax based on its assessed value. The catch is that property taxes aren’t uniform across the country. Each locality sets its own rates, and these can vary significantly. For example, a homeowner in New Jersey could be paying thousands more in property taxes than someone with a similar home in Alabama. Many people look for ways to reduce their property tax burden and wonder if there are any states with no property tax. While no state completely eliminates property taxes, some states offer lower rates or generous tax exemptions. States like Hawaii and Wyoming are known for having some of the lowest property tax rates in the U.S., while states such as New Jersey and Illinois have some of the highest. If you’re looking to move to a state with lower property taxes, keep in mind that some states balance this with higher sales or local income taxes. It’s also worth exploring specific exemptions that may apply to you. Many states offer breaks for senior citizens, veterans and those with disabilities, which can significantly reduce what you owe annually.

States with the lowest property tax

When it comes to property taxes by state, the amount you pay can vary widely depending on where you live. Some states are known for their particularly low property taxes, making them attractive to homeowners looking to save money in the long term. While there are no states with no property tax altogether, there are states where property tax rates are much lower than the national average. It’s important to remember, though, that while some states have lower property taxes, they may compensate with higher income taxes.

Infographic entitled 5 Low Property Tax States listing the states with lowest property taxes.

Hawaii

Hawaii is well-known for its beautiful landscapes and tropical climate, but it’s also recognized for having one of the lowest property tax rates in the United States. If you’re considering buying property in the Aloha State, the relatively low Hawaii property tax might come as a pleasant surprise. Unlike many other states where property taxes can be a significant annual burden, homeowners in Hawaii enjoy a much lighter tax load. The average Hawaii property tax rate is around 0.29%, which is well below the national average. The annual taxes on a median priced house is $1,915. This is great news for residents, as it means more of your money stays in your pocket, even though the cost of real estate in Hawaii can be quite high. In areas like Honolulu, where property values tend to be higher, the lower tax rate still provides some relief compared to places with steeper rates.

Alabama

Alabama consistently ranks as one of the lowest property tax states in the US, making it an appealing option for homeowners who want to minimize their tax burden. When you compare property tax by state, Alabama stands out with an average property tax rate of just 0.43%, which is significantly lower than the national average. The annual taxes on a median priced house is $742. This means that whether you own a modest home or a larger property, your annual property tax bill will likely be much lower than in other parts of the country. This makes Alabama to be one of the most affordable places to own property, especially when compared to other property tax by state rankings across the country.

Colorado

Colorado is often considered one of the lowest property tax states, offering a favorable environment for homeowners looking to keep their housing costs manageable. The property tax rate in Colorado averages around 0.52%, which is significantly lower than the national average. The annual taxes on a median priced house is $2,125. However, Colorado has a range of local tax rates that vary by county. Urban areas may have slightly higher taxes than rural regions, but the overall tax burden remains lower than in many other states.

Nevada

Nevada is often mentioned among states with low property taxes, making it an attractive option for homeowners and real estate investors. The state’s average property tax rate is about 0.55%, which is lower than the national average. The annual taxes on a median priced house is $1,793. Despite being home to cities like Las Vegas, where property values can be higher, Nevada’s tax rates remain relatively moderate. This provides some relief to homeowners, especially when compared to states with higher rates. Additionally, Nevada doesn’t have a state income tax, which further adds to its appeal for those looking to keep overall tax costs low. It's one of the more tax-friendly states for residents.

Utah

Utah is known for being one of the states with low property taxes, making it an appealing option for homeowners. With an average property tax rate of around 0.57%, Utah ranks below the national average, helping to keep housing costs more affordable. The annual taxes on a median priced house is $1,972. This is particularly beneficial in rapidly growing areas like Salt Lake City, where property values have been on the rise. What makes Utah even more attractive is its balanced approach to taxes, offering a relatively low burden on property while maintaining quality public services. For those seeking a state with low property taxes and a growing economy, Utah is a strong contender.

New Jersey: The state with the highest property tax

New Jersey consistently ranks at the top when it comes to property taxes by state, with homeowners facing some of the highest rates in the country. The average property tax rate in New Jersey is around 2.46%, significantly higher than the national average. The annual taxes on a median priced house is $8,928. This means that whether you own a small home or a large estate, your property tax bill is likely to be one of the largest household expenses. For many residents, this steep tax rate is a major consideration when choosing to live in the state. While there are no states with no property tax, New Jersey’s position as the highest can make it a tough financial decision for potential homebuyers and those considering staying long-term.

How to pay property taxes

Paying your property taxes is a regular part of homeownership, and there are generally two ways to handle it. If you have a mortgage, your property taxes might be included in your monthly mortgage payment. In this case, your lender estimates your annual tax bill, divides it by 12, and adds that amount to your monthly payment along with your principal, interest, and insurance—known as PITI (principal, interest, taxes, and insurance). If your actual tax bill turns out to be higher or lower than estimated, your lender will adjust accordingly, either refunding you or asking for an additional payment. You can check how much property tax you’ve paid by looking at box 10 (“Other”) on Form 1098, which your lender should send by January 31 if you paid $600 or more in mortgage interest. If you don’t receive this form, contact your lender or check their website for the information. You might also be able to lower your tax bill by appealing your property assessment or checking for any available exemptions. If your property taxes aren't included in your monthly mortgage payment, you'll need to pay the tax office directly. You'll receive a bill in the mail with instructions on how to make your payment. Typically, you can choose from several methods, such as mailing a check or money order, paying online with a credit or debit card, using an electronic check (eCheck), or paying by phone with a credit or debit card. In addition to the various payment methods, you might have the option to pay your property tax bill all at once or break it into monthly, quarterly, or biannual payments. Some municipalities also offer discounts for early payment, so it's a good idea to check if any prepayment discounts are available to save on your overall tax bill.

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The states with lowest property tax are Hawaii, Alabama, Colorado, Nevada, Utah. Assessing property tax by state is a key factor in deciding where to live.