Lowest Property Tax States: Complete Guide 2026
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Lowest Property Tax States: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Property taxes are one of the largest recurring expenses for homeowners, and they vary enormously across states. While the national average effective rate hovers around ~1.02%, several states maintain rates well below ~0.6%, potentially saving homeowners thousands of dollars annually. This guide identifies the states with the lowest property taxes, explains why their rates are low, and helps you evaluate whether moving to a low-property-tax state makes financial sense.
Top 15 Lowest Property Tax States
| Rank | State | Avg. Effective Rate | Median Home Value | Median Annual Tax |
|---|---|---|---|---|
| ~1 | Hawaii | ~0.28% | ~$740,000 | ~$2,072 |
| ~2 | Alabama | ~0.39% | ~$180,000 | ~$702 |
| ~3 | Colorado | ~0.49% | ~$510,000 | ~$2,499 |
| ~4 | Arizona | ~0.51% | ~$375,000 | ~$1,913 |
| ~5 | Nevada | ~0.53% | ~$420,000 | ~$2,226 |
| ~6 | Wyoming | ~0.55% | ~$280,000 | ~$1,540 |
| ~7 | Tennessee | ~0.56% | ~$260,000 | ~$1,456 |
| ~8 | Idaho | ~0.58% | ~$380,000 | ~$2,204 |
| ~9 | Delaware | ~0.59% | ~$305,000 | ~$1,800 |
| ~10 | Utah | ~0.52% | ~$460,000 | ~$2,392 |
| ~11 | South Carolina | ~0.55% | ~$230,000 | ~$1,265 |
| ~12 | West Virginia | ~0.57% | ~$130,000 | ~$741 |
| ~13 | Louisiana | ~0.55% | ~$195,000 | ~$1,073 |
| ~14 | Arkansas | ~0.60% | ~$165,000 | ~$990 |
| ~15 | Mississippi | ~0.63% | ~$140,000 | ~$882 |
Why Some States Have Low Property Taxes
Diversified Revenue Sources
States with lower property taxes typically have other significant revenue streams that reduce reliance on property tax:
| State | Why Property Taxes Are Low |
|---|---|
| Hawaii | Tourism taxes, high income tax (up to ~11%) |
| Alabama | Income tax with federal tax deduction, sales tax |
| Nevada | Gaming taxes, no income tax but high tourism revenue |
| Wyoming | Mineral severance taxes fund most services |
| Tennessee | High sales tax (~9.55%) compensates |
| Delaware | No sales tax, but income tax and corporate franchise fees |
| Louisiana | Oil and gas severance taxes, sales tax |
Assessment and Rate Limitations
Some states cap property tax rates or use assessment ratios that reduce the effective tax:
- Colorado: Residential assessment ratio is ~6.7% (only ~6.7% of market value is taxable)
- South Carolina: Primary residences assessed at ~4% of market value
- Nevada: ~3% annual cap on property tax bill increases for primary residences
- Alabama: Homestead exemption and low assessment ratios
Low Property Taxes vs. Overall Tax Burden
Low property taxes alone do not guarantee a low overall tax burden. Some states compensate with higher income or sales taxes:
| State | Property Tax Rate | Income Tax | Sales Tax (Combined) | Overall Assessment |
|---|---|---|---|---|
| Hawaii | ~0.28% | ~11% top rate | ~4.44% | High overall due to income tax |
| Alabama | ~0.39% | ~5% | ~9.24% | Moderate overall |
| Wyoming | ~0.55% | None | ~5.44% | Very low overall |
| Tennessee | ~0.56% | None | ~9.55% | Low overall |
| Nevada | ~0.53% | None | ~8.23% | Low overall |
| Delaware | ~0.59% | ~6.6% | None | Moderate overall |
| Colorado | ~0.49% | ~4.4% | ~7.77% | Moderate overall |
Hawaii has the lowest property tax rate but one of the highest income tax rates, resulting in a moderate-to-high overall burden. Wyoming, Tennessee, and Nevada combine low property taxes with no income tax for the lowest overall burdens.
For the complete comparison, see our state income tax rates comparison.
Annual Savings Comparison
To illustrate the impact, here is the property tax on a ~$400,000 home across different states:
| State | Rate | Annual Tax | Savings vs. National Avg. |
|---|---|---|---|
| Hawaii | ~0.28% | ~$1,120 | ~$2,960 |
| Alabama | ~0.39% | ~$1,560 | ~$2,520 |
| Wyoming | ~0.55% | ~$2,200 | ~$1,880 |
| National Average | ~1.02% | ~$4,080 | — |
| Illinois | ~2.08% | ~$8,320 | -~$4,240 |
| New Jersey | ~2.23% | ~$8,920 | -~$4,840 |
A homeowner in Alabama saves approximately ~$7,360 per year compared to a homeowner with the same value home in New Jersey. Over a ~30-year mortgage, that difference amounts to approximately ~$220,800 in property tax savings alone.
Tips for Finding Low Property Tax Areas
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Look within low-tax states for even lower rates. Property tax rates vary by county and municipality within each state. Rural areas typically have lower rates than urban centers. Research specific counties before committing to a location.
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Claim all available exemptions. Even in low-tax states, exemptions can further reduce your bill. Homestead exemptions, age-based exemptions, and veteran exemptions are commonly available. In South Carolina, the homestead exemption for residents age ~65+ provides up to ~$50,000 off assessed value.
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Consider assessment ratio impacts. States like Colorado and South Carolina use assessment ratios that dramatically reduce the portion of market value subject to tax. A ~$500,000 home in South Carolina with a ~4% assessment ratio is taxed on only ~$20,000 of value.
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Factor in the SALT deduction. Even in low-property-tax states, you can deduct up to ~$10,000 in state and local taxes on your federal return if you itemize. With lower property taxes, more of this cap is available for state income tax deductions. See our federal income tax guide.
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Watch for special assessments. Some low-tax areas make up for low rates with special assessments for infrastructure, water, sewer, and other services. Ask about all tax-like charges before purchasing.
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Evaluate school quality. Lower property taxes sometimes correlate with lower school funding. If school quality matters to you, research district rankings alongside tax rates.
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Plan for long-term savings. Property tax savings compound over decades of homeownership. A ~$2,000 annual savings invested at ~7% returns would grow to approximately ~$200,000 over ~30 years. Use our tax bracket calculator to model your total tax savings from relocating. Check our self-employment tax guide if you run a home-based business.
Key Takeaways
- Hawaii (~0.28%), Alabama (~0.39%), and Colorado (~0.49%) have the lowest average effective property tax rates in the nation.
- The national average effective rate is approximately ~1.02%, meaning the lowest-tax states charge less than half the average.
- Low property taxes are often offset by higher income taxes (Hawaii) or higher sales taxes (Tennessee, Alabama), so evaluate total burden.
- Wyoming, Tennessee, and Nevada combine low property taxes with no income tax for among the lowest overall tax burdens.
- Assessment ratios and rate caps in states like Colorado, South Carolina, and Nevada provide additional protection for homeowners.
- A homeowner can save over ~$200,000 in property taxes over ~30 years by choosing a low-tax state over a high-tax state.
Next Steps
- State Income Tax Rates Comparison 2026 — See how income taxes affect the overall picture.
- Federal Income Tax Guide 2026 — Understand how property taxes interact with the SALT deduction.
- Tax Bracket Calculator — Model your total tax burden across different states.
- Find a CPA Near You — Get personalized advice on tax-efficient home purchases and relocation.