Best and Worst States for Property Taxes

Get a List of Property Taxes State By State

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Looking for a state with no property tax is like grabbing binoculars to watch the sky for a unicorn. We've all heard Benjamin Franklin's old quote that nothing is certain in life but death and taxes, and that's especially true for property taxes. You'll pay them if you own real estate, no matter where you live in the U.S., but tax rates are much lower in some states than in others. 

Best States for Property Taxes

A lot of complicated math goes into calculating property tax rates, but the equation ends with a percentage of home value.

This is a good way to rank the states because it provides a standardized number for comparison. 

Let’s say that someone in State A pays $10,000 a year in property taxes on a home worth $1 million. Someone else in State B pays $10,000 a year on a condo worth $150,000. The best way to compare those two states is to figure the property taxes as a percentage of home value. The person in State A is paying only 1 percent of his home's value, while the person in State B is paying almost 7 percent. The person in State A is getting the best deal, even though they're both paying the same dollar amount.  

The Tax Foundation, an independent, non-profit, non-partisan educational and research organization, came up with some figures for the 2015 tax year. As reported by the Fiscal Times, found that the top ten best states for property taxes based on effective rates on owner-occupied houses are: 

  1. Hawaii - 0.28 percent 
  2. Alabama - 0.43 percent 
  3. Louisiana - 0.51 percent 
  4. Delaware - 0.55 percent 
  5. District of Columbia - 0.57 percent 
  6. South Carolina - 0.57 percent 
  7. West Virginia - 0.59 percent 
  8. Wyoming - 0.61 percent 
  9. Colorado - 0.61 percent 
  10. Arkansas - 0.62 percent 

So there you have it. Hawaii is the next best thing to a state with no property tax.

 

The Worst States for Property Taxes

The Tax Foundation found that homeowners in these states paid the most in property taxes:   

  1. New Jersey - 2.38 percent 
  2. Illinois - 2.32 percent 
  3. New Hampshire - 2.15 percent 
  4. Connecticut - 1.98 percent 
  5. Wisconsin - 1.96 percent 
  6. Texas - 1.90 percent 
  7. Nebraska - 1.84 percent 
  8. Michigan - 1.78 percent 
  9. Vermont - 1.71 percent 
  10. Rhode Island - 1.67 percent 

The difference between the state with the lowest rates—Hawaii—and New Jersey's highest rate is a whopping 2.1 percent, which can come out to a pretty significant property tax bill, particularly on a luxury home. 

It's All Relative 

Some states that impose formidable property tax rates, such as New Hampshire and Texas, give residents a few breaks in other major tax categories. For example, Texas has no state income tax. These states rely heavily on property taxes to make ends meet. On the other side of the equation are states that impose high taxes across the board, such as New Jersey and Illinois. 

Property taxes are not set solely at the state level. Cities, counties and local school boards get involved, so taxes in one area of a state might be higher than those in other areas. Several states offer property tax exemptions for senior citizens, veterans and the disabled.