What States Have The Most And Least Expensive Property Taxes?

| May 6, 2021

Many people do not realize how much property taxes vary in each state. Some states have property taxes that are ten times the taxes in other states. If you live in a state your entire life you may be used to it but if you move around a lot or invest in real estate in different states it is important to understand how much property taxes are and how much they can impact commercial or residential real estate ownership. We put together a list of the property taxes for every state in the US including the states with the highest and lowest taxes. These can change and some states figure their taxes differently than others.

How did we figure property taxes?

We compiled data from the US census bureau and compared it to average prices in the states where those taxes are collected. This method leaves out some data but gives an idea of what taxes are in each state. It is important to remember that each county and even city has different tax rates. Some subdivisions will have metro districts that have different tax rates than subdivisions right next to them. Residential properties may have different tax rates than commercial properties as well. Some states may have lower taxes on commercial properties than residential properties and other states may have the complete opposite. This information can be very important when looking at certain areas to move to or invest in.

If you want to know the exact taxes for a house or area please check with the local tax assessor or other experts in the area. These numbers are meant as a broad reference only and are not exact! To figure what property taxes may be using this data multiply the property value by the percentage and that will give you your yearly property tax amount. For example $100,000 x .5% would be $500 a year in property taxes. 

Rank State Effective Property Tax
1 Hawaii 0.30
2 Alabama 0.40
3 Louisiana 0.52
4 Wyoming 0.55
5 West Virginia 0.55
6 South Carolina 0.56
7 Colorado 0.56
8 Delaware 0.58
9 Utah 0.62
10 Arkansas 0.64
11 Mississippi 0.65
12 Nevada 0.66
13 Arizona 0.67
14 New Mexico 0.68
15 Tennessee 0.73
16 California 0.74
17 Idaho 0.75
18 Montana 0.76
19 Kentucky 0.82
20 North Carolina 0.85
21 Virginia 0.86
22 Indiana 0.87
23 Oklahoma 0.88
24 Washington 0.92
25 Georgia 0.92
26 Florida 0.94
27 North Dakota 0.95
28 Oregon 0.98
29 Missouri 1.01
30 Alaska 1.02
31 Maryland 1.04
32 Minnesota 1.11
33 Massachusetts 1.15
34 South Dakota 1.22
35 Maine 1.27
36 Kansas 1.33
37 New York 1.40
38 Michigan 1.44
39 Iowa 1.50
40 Pennsylvania 1.51
41 Rhode Island 1.53
42 Ohio 1.62
43 Nebraska 1.65
44 Texas 1.69
45 Connecticut 1.70
46 Wisconsin 1.73
47 Vermont 1.80
48 New Hampshire 2.03
49 Illinois 2.05
50 New Jersey 2.21

Property taxes are not the only taxes!

This list gives you an idea of what property taxes will be in each state but they are not the only taxes! A lot of people are surprised to see how low California property taxes are because they always hear that California has crazy high taxes. California has high income taxes but not high property taxes. Property taxes are assessed on real estate and income taxes are assessed on the money you earn. Texas on the other hand has high property taxes but no income tax.

How are property taxes paid?

Most people will get a mortgage when they buy a house and the bank will pay the property taxes and homeowners insurance. The bank will keep what is called an escrow account that holds funds for those costs and pays the insurance or taxes directly from that account. A portion of the homeowner’s closing costs when they buy the property will start that escrow account and a portion of their monthly payments will go to that escrow account as well. If your mortgage payment goes up with a fixed-rate loan it is most likely because your property taxes or insurance went up.

If you buy a house with cash or get a private loan the lender most likely will not pay property taxes or insurance for you. In that case, the homeowner will pay the taxes directly to the county assessor who will send bills out every year.

What are property taxes used for?

Property taxes are usually used to pay for local amenities like schools, police, EMTs, roads, and other public areas. Some states have lower taxes and others higher based on the needs of each community and the state tax structure. Colorado has low property taxes but high DMV fees and high income taxes. The states will get their money one way or another to pay for everything but each state has the revenue streams structured a little differently. The ideal situation is to live in an area with low income taxes and invest in an area with low property taxes!

This is why property taxes vary so much in every area. Some states might have low taxes, but the communities within that state have high taxes and vice versa.

What happens if you do not pay your property taxes?

The government does not like it when people do not pay them. If you have a mortgage the bank will pay your taxes for you, you have no choice in the matter. Even if you get behind on payments or stop making payments the bank will still make the tax payments because the bank does not want the government taking the house. Even during foreclosure, the bank will usually continue to make payments. Yes, the government can take your property if you do not pay the taxes on it.

If you do not pay your taxes or in the rare instance that the bank does not pay your taxes there are usually many warnings from the local tax assessor and clear instructions on what happens if you continue not to pay. If you go long enough without paying the local assessor will place a tax lien on the home. If the tax lien is not paid off in a certain amount of time, the tax liens are usually sold at a tax sale. Having the tax lien go to sale does not mean you lose your house right then but every state has different laws and rules. In some states, it can take years for the high bidder of the tax certificate to gain possession of the property and in other states, it can happen very quickly. Check with your local state laws to see exactly how it works in your area and it may take legal counsel to understand exactly how it works.

Note: This article originally appeared at InvestFourMore.


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Category: Real Estate

About the Author ()

Mark Ferguson is the author and creator of InvestFourMore. Mark has flipped over 175 homes including 26 in 2017 and 26 in 2018. Mark also owns 20 rentals including a 68,000 square foot commercial strip mall. Mark started Blue Steel Real Estate, a real estate brokerage in 2018. He has also published 7 books in paperback, Kindle, and audiobook form that you can find on Amazon.

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