The United States of America allows all 50 states to enact their own taxes and laws, including how much property tax an individual or business must pay. Therefore, each state has its own amount, and with all varying statistics, some states have lower taxes than others.
Here, you’ll find 18 states with the lowest property tax in the U.S. The numbers you see below may vary, but the states will be organized overall, starting with the lowest taxes. Read on to find out the details.
Property Tax Explained
Every physical person or corporation that owns property must pay property tax. Most property tax payments only consider the value of the land, but some jurisdictions include other objects, such as cars and boats.
A municipality will hire a tax assessor to determine your property’s value. They will calculate the tax owed using fair market values.
Many states allow property owners to discuss the rate with the assessor and contest it if they believe it is incorrect. However, not paying the property tax will likely result in liens against your land.
The term “real estate tax” is related to property tax, but not all property taxes are real estate taxes. For example, objects and tangible possessions aren’t considered real estate.
Below is a list of states with the lowest property tax rates. However, some houses aren’t taxed according to their full market value. Thus, the annual property tax may not reflect the values calculated from their tax rate and average market price.
States With the Lowest Property Tax Rates
1. Hawaii
Hawaii has the lowest property tax rate of all 50 states, averaging around 0.28%. However, the average home price in Hawaii is $615,300, the highest in the nation. Perhaps the lower property taxes reflect how expensive homes are on the islands.
The annual property tax averages $606 according to calculations based on the taxable proportion of the estate value. Hawaii’s median household income is relatively high, reaching $83,102. These numbers make sense as the more you earn, the more you have to pay.
2. Alabama
There’s a substantial gap between Hawaii’s and Alabama’s lowest property tax rates. Alabama’s rate is 0.41%, and it’s the most significant gap between any two states in the U.S. You’ll notice this phenomenon in the entries we discuss below.
However, homes in Alabama are pretty cheap, costing $142,700 on average. That’s a sixth of a home in Hawaii. The annual property tax is higher at $895 due to the gap.
The median household income is $50,589, slightly above 50% of Hawaii’s. This number ranks relatively low, but the cheap homes offset it.
3. Colorado
The property tax rates of the states increase gently, starting with Colorado’s, set around 0.51%. However, it is the second-largest gap between rates, the first being the former two states mentioned above.
The average home price is $343,300, while the annual property tax is $1,113. As the third-lowest property tax rate in the United States, Colorado is still an affordable option to own property.
Residents here earn more than $77,127 on average. That’s 10th place in the race for the highest median household income in the U.S.
4. Louisiana
The swampy state of Louisiana may be known for wetlands, but its property taxes are also relatively low. The rate is 0.55%, much lower than many other states out there. Such a low rate is coupled with a low average home price of $163,100.
Thanks to these numbers, residents can own homes, even though the annual property tax is higher at $1,187. Nevertheless, compared to other states, this amount is reasonable.
As for median household earnings, the state reports $49,469. Residents may struggle initially, but the lower property costs make up for it.
5. South Carolina
There’s a world of difference between South Carolina’s and North Carolina’s property tax rates. The former state only requires 0.57% annually, but North Carolina’s rate is 0.84%, a substantial gap. Nevertheless, the average home prices are still quite similar, about $162,300 for a house.
The annual property tax is slightly higher than Louisiana’s at $1,238. However, the difference is barely noticeable in the short term.
On average, South Carolinians earn $53,199. It’s not a large number nor high ranking on the list, but the residents are likely comfortable with this living wage.
6. Delaware
The state of Delaware’s 2021 property tax rate is the same as South Carolina, at 0.57%. However, Delaware residents pay more for owning homes. The average is calculated to be around $251,100, a striking increase from South Carolina’s home prices.
Delaware citizens pay only $2 more than South Carolinians, their annual property tax averaging $1,240. This difference is more than negligible, and observers can notice how similar both states are.
Where this state differs is in median household income. The people earn $68,287 per year, and they could likely handle the cost of a house after some savings.
7. West Virginia
West Virginia ranks 7th on the lowest property tax scale. The state is known for country roads and incredibly low average home prices.
As for the real estate tax rate, the state boasts a low 0.58%, only a slight increase from Delaware and South Carolina. This rate, coupled with lower home prices of $119,600, is incredibly easy on families.
The annual property tax is still slightly higher at $1,269.
West Virginians earn less per annum, averaging at $46,711. Only Mississippi has a lower median annual household income.
8. Nevada
Nevada is known for Las Vegas and many other tourist attractions, but its citizens also enjoy a relatively low property tax rate at 0.60%. However, Nevada isn’t any lower due to higher home costs, as a house costs around $267,900 on average.
The typical Nevadan will pay $1,310 per annum in property tax with basic calculations. However, they can likely afford to own a home, as the state’s median household income is $60,365. This number is in the middle of state household income rankings.
Considering all of these factors, Nevada’s cost of living isn’t too bad after all.
9. Wyoming
In terms of state area, Wyoming is ranked 10th, but it’s unique because it has the lowest population of any other state, making it the least densely populated state in the U.S. This reason may be why the state’s property taxes aren’t very high.
Wyoming citizens have a property tax rate of 0.61%, only slightly higher than Nevada. Both states also have similar average home prices. Houses in Wyoming cost $220,500, about $40,000 less.
As such, residents pay an average of $1,319 per year. It’s also only a $9 increase.
The state’s median household income is around $64,049.
10. Arkansas
Arkansas is full of wilderness and parks, making it a perfect location for hikers and outdoor lovers. However, it’s also a mild place and has a strong economy. The latter reason is probably why it makes this list.
The property tax rate of Arkansas is 0.62%, a gentle increase from Wyoming. Notably, the homes in Arkansas are incredibly cheap, costing $127,800 on average. Not many states offer more affordable homes than Arkansas.
The annual property tax is $1,358. Arkansas would likely rank higher on this list if the property tax rate were lower.
However, Arkansas is the third to last in median household income by state. The people earn $47,597 on average. Nevertheless, homes are still cheap to buy.
11. Utah
Utah is well known for being the birthplace of Mormonism, but it’s also a friendly state to live in. Its capital, Salt Lake City, is known for being welcoming, citizens being incredibly generous, and it’s not too surprising that the state has an excellent standard of living.
The property tax rate is 0.63%, and the average home cost is $279,100. While the latter is a considerable increase, it still pales compared to other states.
The annual property tax averages around $1,362. That’s $4 more than Arkansas. Even so, Utah has the 12th highest state median income at $71,621.
12. Arizona
Arizona contains vast deserts beautiful scenery, and the property tax is relatively low. Currently, its rate sits at 0.66%. However, a home in Arizona is somewhat expensive at $225,500.
Citizens pay an average of $1,446 every year in property taxes. That’s about $80 more than Utah.
Compared to other states, Arizona’s median household income average as of 2021 is $58,945 a year.
Depending on the location, you may like this state’s arid climate and the below-average living costs.
13. Idaho
Many tourists visit Idaho every year because the Rocky Mountains run through this state, and its mountainous terrain boasts plenty of outdoor environments for adventures.
There’s a slight jump in the property tax rate, as Idaho’s is 0.69% a year. However, the average cost of a house in this state is $212,300, still fairly low.
Idaho isn’t the best in median household income, with the state average being $55,785. That’s slightly lower than Arizona’s calculations, too.
There are ski resorts and more in Idaho, so this might be a suitable place to live if you’re a fan of winter sports.
14. Tennessee
Tennessee is a truly southern state at the heart of the country music scene. Elvis Presley himself lived in Memphis, the second-most populated city in the state.
The state’s current property tax rate is 0.71%. However, you’d be surprised to see how cheap houses are here. On average, a home costs $167,200.
Residents pay $1,548 in property taxes yearly, even though their houses cost less.
Many people have moved to Tennessee to enjoy low living costs and tax rates. Maybe you’ll be one of them in the future.
15. California
Most people think of California’s high living costs and Hollywood. However, while the weather is excellent, the living costs are much more than in other places in the U.S.
Nevertheless, the state’s property tax rate is at 0.76%, which isn’t the highest among all 50 of them. So it’s somewhat surprising to see this low of a number.
However, the houses are costly at $505,000 on average. That’s almost five times the cheapest states’ house cost.
The annual median property tax paid by Californians is $1,644 while earning an average of $75,235 a year. So if you can afford to live in California, you should be prepared to spend more on the house.
16. New Mexico
New Mexico is known for many things, including the Los Alamos site, where the first atomic bombs were exploded. However, you may not know that it ranks high in affordability. The state is 3.1% cheaper to live in than the national average due to the lower cost of homes.
The property tax rate was 0.80% in 2021, while homes cost $171,400. The latter is only slightly more expensive than Tennessee and South Carolina.
New Mexico’s residents pay about $1,740 a year in property taxes. This figure is around 3/8 of the highest property tax average.
In contrast to California, New Mexicans earn only $49,754 a year.
While some people avoid the state due to lower quality of life, you can’t deny that the state is cheap to reside in.
17. Mississippi
Mississippi is home to the second-longest river in North America, running through Mississippi. The state has many stunning sites, but many don’t know that it’s generous to new homeowners. There are also many growth opportunities.
As for the property tax rate, Mississippi is currently sitting at 0.81%. As a result, houses in the state are incredibly cheap, commanding some of the lowest prices in the nation. The average is now $119,000, and residents will pay $1,751 per year due to the higher rate.
Mississippi has the lowest median household income average at $45,081.
18. Virginia
Virginia was one of the earliest states in the Union. Currently, it remains a comfortable place to live in.
The property tax rate is 0.82%, while houses here cost $273,100. Therefore, property owners pay an average of $1,779 a year.
The median household income of Virginians is $74,222.
Pay Less Instead
These are the states with the lowest property tax rates and averages. While they remain in these rankings, it doesn’t mean houses will be cheaper. It’s better to do your research as you consider your options.