Property tax rates by state range from about 0.32 percent in Hawaii to 1.88 percent in New Jersey and Illinois, a spread wide enough that identical homes can produce tax bills five or six times apart depending on the state line. The percentage rate tells you one part of the story; the dollar amount you actually write each year tells the rest, and the two do not always point the same direction.
States With the Highest Effective Property Tax Rates
The top of the ranking clusters in the Northeast, with two exceptions. Based on the Tax Foundation’s analysis of 2024 Census data, the highest effective rates are:
- New Jersey: 1.88 percent
- Illinois: 1.88 percent
- Connecticut: 1.54 percent
- New Hampshire: 1.50 percent
- Vermont: 1.42 percent
New Jersey and Illinois are virtually tied, though New Jersey has held the top spot for years. Illinois’s high rate is driven in large part by local pension obligations and school-district funding structures that lean heavily on property revenue. Texas, often mentioned as a high-property-tax state because it has no income tax, ranks seventh nationally at 1.40 percent.1Tax Foundation. Property Taxes by State and County, 2026
New Hampshire and Vermont illustrate a pattern worth noting. States that collect little or no broad-based income tax often compensate with higher property taxes. New Hampshire has no general income or sales tax, so local property taxes carry an outsized share of the revenue load.1Tax Foundation. Property Taxes by State and County, 2026
These rates are not fixed. They shift as home values rise or fall, as municipalities adjust budgets, and as reassessment cycles update the tax base.
States With the Lowest Effective Property Tax Rates
The bottom of the ranking features a mix of Sun Belt states, resource-rich economies, and places where high home values keep the effective rate low even when total bills run large:
- Hawaii: 0.32 percent
- Alabama: 0.36 percent
- Colorado: 0.50 percent
- Nevada: 0.50 percent
- Louisiana: 0.55 percent
Hawaii’s rock-bottom rate is deceptive if you only look at the percentage. Home prices there are among the highest in the nation, so the dollar amount on a tax bill can still be substantial. The low effective rate reflects the math: when the denominator (home value) is enormous, even a moderate tax bill produces a small percentage. The state also centralizes many services at the state level rather than delegating them to counties, which reduces local property tax demand.
Alabama’s low rate is more straightforward. Home values are modest, and the state constitution historically kept property tax authority tightly constrained at the local level. Colorado’s rate reflects decades of strict constitutional limits on tax increases, most notably the Taxpayer’s Bill of Rights, which requires voter approval before governments can raise revenue beyond set thresholds.2Tax Foundation. Taxes In Colorado Nevada caps property tax increases at a fixed percentage per year regardless of how fast home values climb, which keeps the effective rate below what the market would otherwise dictate.
Why the Percentage Rate Alone Can Mislead You
Effective rates are the best tool for comparing states, but they can hide the reality of what you actually write a check for each year. Dollar amounts matter when you’re budgeting for monthly escrow payments or calculating rental property cash flow.
New Jersey leads both categories. The average residential property tax bill there reached $10,340 in 2025, and some counties in the northern part of the state average well over $13,000. That’s the combined result of high rates and high home values working together to produce enormous bills.
California is the opposite story. Its effective rate sits at 0.70 percent, ranking it in the lower third of all states.3Tax Foundation. California Tax Rates, Collections, and Burdens The state’s expensive housing means the median annual tax payment still runs into the thousands. A homeowner with a $900,000 house at that rate pays roughly $6,300. The percentage looks modest; the bill does not.
At the other end, Alabama has among the lowest median tax bills in the country. The Tax Foundation reports an average bill of $485 statewide, with some rural counties coming in below $225.4Tax Foundation. Property Taxes by State and County, 2024 Mississippi and West Virginia also produce relatively low bills in absolute dollars, with medians in the $800 to $1,200 range. For retirees or anyone on a fixed income, those dollar figures matter more than the effective rate when choosing where to live.
Always look at both. A low-rate state with expensive housing can cost you more in real dollars than a higher-rate state where homes are affordable.
Why Some States Tax Property So Much More Than Others
Property tax rates are not random. They reflect choices about how a state funds its government, and the biggest driver is what other taxes exist to share the load.
States with no broad-based income tax almost always lean harder on property taxes. New Hampshire collects no general income or sales tax, so property taxes fund the bulk of local government operations. Texas follows the same pattern. Both rank in the top ten nationally for effective property tax rates despite having reputations as low-tax states. The savings you get from skipping income tax often show up on your property tax bill instead.1Tax Foundation. Property Taxes by State and County, 2026
School funding formulas are the other major factor. In many states, local school districts draw the majority of their budgets from property taxes. States that push more school funding to the state level through income or sales tax revenue tend to have lower property tax rates. States that leave school funding mostly to local districts create pockets of extremely high property taxes, particularly in suburban areas with well-regarded school systems.
Natural resources and tourism play a role at the bottom of the ranking. Louisiana’s oil and gas revenues reduce the state’s reliance on property taxes. Nevada generates significant revenue from gaming and tourism. Hawaii’s visitor economy generates tax revenue that would otherwise come from residents. These alternative revenue streams allow property tax rates to stay lower than they would be in a state relying on its residents for every dollar.
Reading Competing Rankings
You’ll find several widely cited property tax rankings online, and they don’t always agree. The Tax Foundation uses Census Bureau data on owner-occupied housing to calculate effective rates, while WalletHub applies its own methodology and arrives at higher figures for many states. The Tax Foundation places New Jersey’s effective rate at 1.88 percent for 2024, while WalletHub reports 2.11 percent for 2026. Neither is wrong; they’re measuring slightly different things.
The metric that matters most for comparison purposes is the effective property tax rate, which is total property taxes paid divided by the total market value of the home. This strips away differences in assessment ratios, exemptions, and local millage rates to show what percentage of your home’s value you actually hand over each year. A home assessed at 80 percent of market value with a high millage rate might produce the same effective rate as a home assessed at full value with a lower millage rate. The effective rate captures the bottom line, and it’s the number to use when you compare one state against another.