The Best and Worst Property Taxes by State
Median state tax rates can vary considerably
States with no property tax don't exist. Every state and the District of Columbia imposes some form of this type of tax, but that's where the commonality ends. Tax rates can range from very low in one jurisdiction to astronomically high in another, and other types of taxes can balance low or high property tax rates so the overall impact on residents is roughly the same.
These taxes are commonly associated with real estate, but some states tax vehicles and other assets as well.
Property taxes generate the revenue needed by states to keep themselves up and running. School districts tend to rely heavily on these taxes, but these taxes also fund city and state workers' salaries—including first responders—as well water, sewer, and other services.
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.
How Property Taxes Are Calculated
A lot of complicated math goes into calculating property taxes, and states compute rates according to their own unique formulas. All share two important components, however: a property's assessed value and the tax rate, typically a percentage of the value.
Percentages are a good way to compare state property tax burdens because they provide a standardized number. Someone in State A might pay $10,000 a year on a home worth $1 million, while someone in State B pays $10,000 a year on a condo worth $150,000.
The guy in State B has a more onerous tax burden. The person in State A is paying only 1% of his home's value while State B is paying almost 7%, although they're both paying the same dollar amount.
The 10 Best States for Property Taxes
These are the top 10 best states for property taxes as reported by Tax-Rates.org in 2019, in order from lowest to highest rates.
Keep in mind that these are median percentages using aggregate data—half of all rates are higher and half are lower in each state.
The 10 Worst States for Property Taxes
World Population Review found that homeowners in the following states paid the most in these taxes in 2019. They're ranked from the most to least expensive in this category.
The difference between the state with the lowest rate—Louisiana—and New Jersey's highest rate is a whopping 1.71 percentage points. This might not sound like much at first glance, but again, when it's correlated to a home's value it can come out to a pretty significant tax bill, particularly on a luxury home.
For example, the median tax on a $1.5 million Louisiana home works out to $27,000 at 0.18%. It works out to $283,500 in New Jersey at a median rate of 1.89%. That's a walloping difference of $256,500.
The Correlation With Other Tax Rates
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, but it taxes property at a significant median rate of 1.81%. The state relies 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. The state with the highest combined property, income, and sales taxes is New York, followed by Hawaii—and, yes, Hawaii made the 10 best list for property taxes, notching in at No. 2 at just 0.26%, so it's all relative.
Property Tax Relief
Several states offer various options to reduce the burden of these taxes.
- Some states provide property tax exemptions to senior citizens, veterans, and the disabled.
- Some offer homestead exemptions for at least a portion of a home's value if the owner actually lives in the residence—it's not a rental or investment property.
- Homeowners might also qualify for a state tax credit based in some areas on the amount of their property taxes.
- You can often ask for relief if you're going through tough financial times. Some taxing authorities will defer your payments for a period of time in this case.
The worst thing you can do is ignore that tax bill if it's not included in your monthly mortgage payment, which is often the case. Simply not paying can only invite disaster in the way of tax liens and foreclosure.
Who Sets Home Value?
You can't simply tell the state, county, or municipality how much you think your property is worth and let them take it from there. Your home's value for tax purposes is based on its appraised fair market value. And, no, the appraiser is not an independent third party.
Property tax assessors typically work for the government. Most states have an appeals process in place, however, so you have some recourse if you receive an astronomical and unreasonable assessment.
You can expect your tax bill to go up if you add a second floor to your home or put an in-ground swimming pool in your backyard. Improvements such as these will almost certainly increase your home's fair market value. You'll find yourself paying more in property taxes even if your state's tax rate remains the same.
The values of other homes in your area can be taken into account as well.
The Tax Policy Center. "How Do State and Local Property Taxes Work?" Accessed Jan. 12, 2020.
Tax-Rates.org. "Property Taxes By State." Accessed Jan. 27, 2020.
World Population Review. "Property Taxes by State 2020." Accessed Jan. 11, 2020.
World Population Review. "States With No Income Tax 2020." Accessed Jan. 11, 2020.
World Population Review. "Tax Burden by State 2020." Accessed Jan. 11, 2020.