In tax matters, the property taxes They are one of the main sources of income. City, county, and state governments use this money to finance various projects. These are intended to raise the quality of life of the locals, such as schools, new housing, road maintenance, new parks, recreation venues, strengthening public transportation, and of course, to pay employee payroll, including salaries for the police, fire department, and local public works department . Below we’ll look at the 10 states with the best property tax rates.
Depending on where you live, the tax rate can be a modest amount or so high that it rivals your mortgage payment. To give you an idea, in the United States, the average property tax rate (which includes total real estate taxes calculated according to the value of the home) was positioned at 1.13% for the year 2016; this according to figures reported by the tax policy research organization Tax Foundation.
hawaii was crowned as the state with the lowest tax rate in the country having an average of 0.29%. The prize for the most expensive? He took it New Jersey, with an average property tax rate of 2.16%.
States levy annual property taxes on real estate that are calculated based on the appraised value of the land and building structures they own. Within this list, you’ll find states with high median family incomes, affordable housing, and a fairly comfortable property tax rate, as well as the opposite.
The 10 states with the best property tax rates in the United States
If you’re curious about how much you could save on property taxes by moving to another part of the country, be sure to check out our list with the 10 states with the best property tax rates.
To help you decide on one of the options, we will also tell you what the average value of a home is in each of the states, the total amount of annual taxes that you would have to pay to live in them and the standard family income of each locality. This way, you will know if moving (and working) in that state will be a good decision or not..
The value of the real estate properties of the states taken into account for the ranking belongs to the month of February 2019. Additionally, values reported by Zillow’s Home Value Index (ZHVI) were included. In this way, we know the estimated value of a single-family home in each of the listed states.
All the amounts obtained were complemented with the data published by the United States Census Bureau in the American Community Survey 2013-2017, information that will help you determine the average income of residents.
Hawaii has the lowest effective property tax rate in the country. However, it is important to note that it also enjoys the highest average value at the home level, which means that, despite their low taxes, the owners could have to pay a quite considerable amount of taxes.
- Median Household Income: $74,923
- Average home value: $620,400
- Effective property tax rate: 0.29%
- Average Annual Home Taxes: $1,799
Alabama is the second state with a low tax rate. The good? Home prices are well below the national average ($225,300 in February 2019), making Alabama one of the most affordable states for homeowners.
- Median Household Income: $46,472
- Average home value: $130,500
- Effective property tax rate: 0.40%
- Average Annual Home Taxes: $522
Louisiana is another state that gives its residents the opportunity to pay low property taxes. Fortunately for them, buy a house in Louisiana it is also quite cheap, at least more than the national average. The best? Gas in the town is taxed with a tax as low as 20 cents per gallon, one of the lowest in the country.
- Median Household Income: $46,710
- Average home value: $147,200
- Effective property tax rate: 0.51%
- Average Annual Home Taxes: $751
#4 West Virginia
In West Virginia, the effective property tax rate is also quite affordable, as are home prices, which remain below the US average.
- Median Household Income: $44,061
- Average home value: $97,600
- Effective property tax rate: 0.53%
- Average Annual Home Taxes: $517
While homes in Wyoming aren’t as affordable as the other states on the list, the state does have an extra plus point: does not charge state income tax. Plus, their sales tax is one of the lowest in the country. (4%).
- Median Household Income: $60,938
- Average home value: $226,300
- Effective property tax rate: 0.55%
- Average Annual Home Taxes: $1,245
#6 South Carolina
South Carolina and Delaware have the same effective property tax rate (0.56%). The difference is in the houses. In South Carolina, house prices are lower, which gives it an advantage over the state of Delaware. Let’s look at the figures:
- Median Household Income: $48,781
- Average home value: $165,100
- Effective property tax rate: 0.56%
- Average Annual Home Taxes: $925
As stated above, Delaware and South Carolina have the same effective property tax rate. But since houses in Delaware are more expensive, homeowners are likely to have to pay more. However -and giving Delaware an extra point- the average family income is higher in this state and, as a curious fact, you will be delighted to know that residents do not have to pay any sales tax.
- Median Household Income: $63,036
- Average home value: $237,300
- Effective property tax rate: 0.56%
- Average Annual Home Taxes: $1,329
Colorado’s effective property tax rate is low, but its home prices are higher. That means homeowners will pay $2,000 or more to own an average home, which is the highest tax burden — in dollars — of any other state on the list.
However, not everything is bad because Colorado’s median household income is second highest in the ranking. This will undoubtedly make the tax bill easier to pay.
- Median Household Income: $65,458
- Average home value: $375,500
- Effective property tax rate: 0.59%
- Average Annual Home Taxes: $2,215
Arkansas combines a low effective property tax rate with low housing costs. In fact, this is the main factor that makes it attractive to Americans looking to enjoy a good quality of life for less money. Gas in Arkansas is taxed at 22 cents per gallon (2018 figures). Of course, not everything is rosy. The combined sales tax in Arkansas is at the top of the ranking, reaching 9.41%: the third highest in the country.
- Median Household Income: $43,813
- Average home value: $125,700
- Effective property tax rate: 0.63%
- Average Annual Home Taxes: $792
Mississippi has the highest effective property tax rate on the list, but don’t be fooled by this figure. Despite the result, it is below the average for the United States. What’s more, the gallon of gas is only taxed with 19 cents, which is one of the lowest rates in the country and their houses are perhaps one of the cheapest in the USA.
- Median Household Income: $42,009
- Average home value: $127,300
- Effective property tax rate: 0.64%
- Average Annual Home Taxes: $815
In summary, the 10 states with the best property tax rates in the USA
If you like living in a big house on a large tract of land, you may want to consider moving to a state in the country that has a lower tax rate.. In this way, you will be able to save more, something that your bank account will thank you for. Remember that Hawaii reports the lowest property tax rate in the country at 0.29%, while the highest is in New Jersey at 2.16%.
On the other hand, several of the states you will find on the list have a tax rate close to or below 1%. Most of them are located in the southern United States.
You may also be able to get other exemptions if within the family there is a veteran or disabled member. States also sometimes grant exemptions to homeowners who retrofit their homes to use renewable energy (solar panels) or those who -at least- convert their homes to more energy-efficient construction.
Our recommendation? Since these discounts won’t magically appear on your tax bill, check with your state tax agency to find out if they’re available and what conditions are needed to qualify.