Learn which states cost the least and what it means for property owners
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Published by Investopedia

By JEAN FOLGER
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Property taxes are a key source of income for local governments, which use the money to fund projects such as schools, road construction, maintenance, parks and recreation programs, public transportation, and payroll for municipal employees—including police, firefighters, and public works departments.

Depending on where you live, you may pay a modest amount in property taxes or your tax bill could rival your mortgage. Across the United States, the mean effective property tax rate—total real estate taxes paid divided by total home value—was 1.03% for 2019, according to data from the Tax Foundation, a tax policy research organization. Hawaii had the lowest rate in the country, at just 0.31%. New Jersey had the highest rate, at 2.13%.

While several states offer exceptions that make it possible to avoid paying any property taxes, as long as you meet the specified requirements, there isn’t a single U.S. state that doesn’t levy a minimum property tax.

Typical home values—current as of January 2022—are from real estate aggregator Zillow’s Home Value Index (ZHVI), a smoothed, seasonally adjusted measure of the estimated home value for single-family homes (including condos and co-ops) across the U.S.

Data from the U.S. Census Bureau’s American Community Survey was used to find median household incomes.

1. Hawaii
Effective Property Tax Rate (2019): 0.31%
Typical Home Value (2022): $828,002
Annual Taxes on Home Priced at State Typical Value: $2,566.81
Median Household Income (2019): $83,102
According to our research, as of the 2019 calendar year, Hawaii had the lowest effective property tax rate in the country.
Of course, it also has the highest typical home value of the 10 states on our list, which means that homeowners in this state may still be on the hook for a hefty tax bill.
Despite having the highest median income out of all 50 states and the District of Columbia (second only to Washington, D.C.) in 2019, this is undermined somewhat by Hawaii also having the highest cost of living (as measured by the Consumer Price Index (CPI)) of any state as of 2021.
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2. Alabama
Effective Property Tax Rate (2019): 0.37%
Typical Home Value (2022): $189,976
Annual Taxes on Home Priced at State Typical Value: $702.91
Median Household Income (2019): $51,734
Alabama has both a low property tax rate and home prices that are well below the typical home value in the U.S. ($325,677 as of Jan. 31, 2022), making it one of the most affordable states to be a homeowner.
It’s also one of the most affordable states to live in overall, as it had the third-lowest cost of living in the country in 2021.
However, Alabama also had a relatively high poverty rate in 2019, with 15.5% of its population living below the poverty line.

3. Louisiana
Effective Property Tax Rate (2019): 0.51%
Typical Home Value (2022): $203,222
Annual Taxes on Home Priced at State Typical Value: $1,036.43
Median Household Income (2019): $51,073
Louisiana is another state on our list with both a low effective property tax rate and typical home values that are well below the national average.
In 2021, gas in Louisiana was taxed at 20 cents per gallon—one of the lowest rates in the country—and its cost of living, while not the lowest, was still better than 34 states and the District of Columbia.
Like Alabama, Louisiana’s overall affordability is contrasted by its high poverty rate of 19%, second only to Mississippi in 2019.

4. Wyoming
Effective Property Tax Rate (2019): 0.51%
Typical Home Value (2022): $303,325
Annual Taxes on Home Priced at State Typical Value: $1,546.96
Median Household Income (2019): $65,003
Wyoming’s typical home values aren’t as low as some of the other states on our list, but there’s no state income tax, and at 4%, the state’s sales tax was one of the lowest in the country in 2021.
Additionally, while Wyoming did have a moderate cost of living in 2021, it also had a solid median household income and a lower poverty rate than most states in 2019
Its total gas tax of 24 cents is also on the lower side.

5. Colorado
Effective Property Tax Rate (2019): 0.52%
Typical Home Value (2022): $545,794
Annual Taxes on Home Priced at State Typical Value: $2,838.13
Median Household Income (2019): $77,127
The effective property tax rate in Colorado is low, but higher home prices mean that homeowners will pay $2,838.13 on a typically priced home—the second-highest tax burden (dollar-wise) of any state on our list.
Of course, Colorado’s median household income is also the second-highest on our list, which may help that tax bill seem a bit more affordable.
At 9.3%, the state had one of the lowest poverty rates in the U.S. in 2019.

6. South Carolina
Effective Property Tax Rate (2019): 0.53%
Typical Home Value (2022): $261,882
Annual Taxes on Home Priced at State Typical Value: $1,387.97
Median Household Income (2019): $56,227
South Carolina and West Virginia have the same effective property tax rate of 0.53%, but South Carolina’s significantly lower typical home values give the state an edge when it comes to cost of living.
In fact, outside of its somewhat higher utilities costs, South Carolina’s other cost-of-living categories were fairly low in 2021.
However, like several other Southern states, its poverty rate was on the higher side in 2019.

7. West Virginia
Effective Property Tax Rate (2019): 0.53%
Typical Home Value (2022): $126,948
Annual Taxes on Home Priced at State Typical Value: $672.82
Median Household Income (2019): $48,850
West Virginia’s low effective property tax rate and modest home prices can make for the lowest housing costs in the country.
The state’s overall cost of living was among the 10 best in the country in 2021, as was its gas tax rate in 2021.
Conversely, at 16%, West Virginia’s poverty rate was notably higher than most in 2019, as was its combined state and local sales tax rate of 7.46% in 2021.

8. Utah
Effective Property Tax Rate (2019): 0.56%
Typical Home Value (2022): $529,509
Annual Taxes on Home Priced at State Typical Value: $2,965.25
Median Household Income (2019): $75,780
Property taxes in Utah are some of the highest on our list, as it had a higher effective tax rate in 2019, in addition to the highest typical home values out of all 10 states listed here.
Additionally, its combined sales and local tax rate and its gas tax rate are higher than most.
On the plus side, the median household income in the state was also on the higher side in 2019.

9. Delaware
Effective Property Tax Rate (2019): 0.59%
Typical Home Value (2022): $332,115
Annual Taxes on Home Priced at State Typical Value: $1,959.48
Median Household Income (2019): $70,176
Above-average typical home values in Delaware mean that homeowners will likely pay more in property taxes.
Delaware also had a higher cost of living across all categories in 2021, except for utilities, and a moderate poverty rate in 2019.
Still, Delaware had a higher median household income in 2019 and, as an added bonus, the state has no sales tax.

10. Arkansas
Effective Property Tax Rate (2019): 0.61%
Typical Home Value (2022): $166,566
Annual Taxes on Home Priced at State Typical Value: $1,016.05
Median Household Income (2019): $48,952
A low effective property tax rate coupled with low housing costs help make for an attractive cost of living in Arkansas.
Gas was taxed at 25 cents per gallon—well below the 2021 national average of 31 cents per gallon—but sales tax was on the high end, with a combined state and average local sales tax rate of 9.51% (the fourth highest in the country).

What 10 states have the lowest property taxes?
According to the Tax Foundation, the 10 states with the lowest property taxes in 2019 were Hawaii (0.31%), Alabama (0.37%), Louisiana (0.51%), Wyoming (0.51%), Colorado (0.52%), South Carolina (0.53%), West Virginia (0.53%), Utah (0.56%), Delaware (0.59%), and Arkansas (0.61%).

What 10 states have the highest property taxes?
According to the Tax Foundation, the 10 states with the highest property taxes in 2019 were New Jersey (2.13%), Illinois (1.97%), New Hampshire (1.89%), Vermont (1.76%), Connecticut (1.73%), Texas (1.60%), Nebraska (1.54%), Wisconsin (1.53%), Ohio (1.52%), and Iowa (1.43%).

Are there any states with no property taxes?
All 50 states and the District of Columbia levy property taxes.
However, some people may qualify for a property tax exemption. Some states offer homestead exemptions, while other types of exemptions exist for older homeowners, people with disabilities, military veterans, and homeowners who make certain renovations or install renewable energy systems (e.g., solar panels).

The Bottom Line
Depending on where you live, you may qualify for a property tax exemption offered by your state, county, or local jurisdiction. For example, some states offer a homestead exemption, where you don’t pay taxes on a certain portion of your home’s value—say, the first $150,000—if you meet certain age or income requirements following the death of a homeowner spouse or the declaration of bankruptcy.

Other types of exemptions may be available that lower taxes for older homeowners, people with disabilities, military veterans, and homeowners who do certain renovations or install renewable energy systems, such as solar panels.
Since these discounts don’t automatically show up on your tax bill, it’s important to ask the agency that collects your property tax to find out if you’re eligible.

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