Property taxes by state vary more than almost any other household cost in the United States. New Jersey and Illinois sit at the top with effective rates near 1.88% of home value, while Hawaii sits at the bottom around 0.27%. A homeowner with an identical property in New Jersey can pay six or seven times what a Hawaii owner pays each year, a swing large enough to shape where people buy, retire, or invest.
States With the Highest Effective Property Tax Rates
Effective rate is the annual tax as a share of the home’s market value, which is the cleanest way to compare intensity across states. Based on Census Bureau data compiled by the Tax Foundation, the top five look like this:
- New Jersey — 1.88%. First in the nation. Separate 2026 estimates from WalletHub place the rate even higher, at 2.11%.
- Illinois — 1.88%. Essentially tied with New Jersey. There is no single statewide rate; each community sets its own levies, and some Cook County suburbs run well above 3%.
- Connecticut — 1.54%. A combination of high municipal spending and expensive housing stock.
- Vermont — 1.51%. Education funding formulas that lean on local property wealth push the rate up.
- New Hampshire — 1.50%. The state has no general income or sales tax, so local governments depend almost entirely on property taxes. New Hampshire ranks 48th in state aid to local governments.
These rates translate to real money quickly. At 1.88%, a home worth $400,000 generates roughly $7,520 in annual property taxes before exemptions. At New Hampshire’s 1.50%, that same home produces $6,000 a year.
States With the Lowest Effective Property Tax Rates
At the other end, some states tax property so lightly the bill barely registers next to other homeownership costs:
- Hawaii — 0.27% to 0.29%. The lowest in the country by a wide margin. Hawaii offsets this with a general excise tax and income tax rates that reach above 10% for top earners.1Tax Foundation. Taxes In Hawaii
- Alabama — 0.37%. Ranks 49th. The state carries a comparatively high combined state and local sales tax rate instead.2Tax Foundation. Taxes In Alabama
- Arizona — 0.48%. Constitutional limits restrict property tax increases.
- Colorado — 0.48% to 0.50%. The Gallagher Amendment historically restricted how much total property tax revenue could come from residential properties.
- Nevada — 0.47% to 0.50%. A partial abatement law caps annual tax bill increases at 3% for primary residences.3Tax Foundation. Property Taxes by State and County
Low property taxes almost always come with a trade-off. States that go easy on homeowners tend to collect more through sales taxes, income taxes, or fees on tourism and natural resources. A state that looks cheap on property tax alone may not be cheap once the full picture is in view.
What Homeowners Actually Pay: Median Tax Bills
Effective rates measure intensity. Median bills measure what people actually hand over each year, and the two rankings do not line up.
New Jersey leads here as well, with an average residential property tax bill that reached $10,570 in the most recent year of data. Connecticut and New York both produce median bills above $6,000 annually. Massachusetts posts a median around $6,080 despite an effective rate near 1.00%, because home values are so much higher than average. California tells a similar story: an effective rate around 0.70% looks unremarkable, but coastal property values push the median bill well above $4,000.3Tax Foundation. Property Taxes by State and County
At the bottom, several states combine low rates with affordable housing to produce annual bills that barely top a monthly payment in high-tax states:
- Alabama: A statewide average around $511 per year. County medians range from under $200 in rural Choctaw County to about $1,343 in Shelby County near Birmingham.3Tax Foundation. Property Taxes by State and County
- West Virginia: Median bills around $820 to $880.
- Mississippi: A median around $930, with an effective rate of 0.58% applied to relatively modest home values.4Tax Foundation. Taxes In Mississippi
- Arkansas and Louisiana: Both typically fall under $1,200 per year for the median homeowner.
Why the Rate Rankings and Bill Rankings Diverge
Two states with identical effective rates can produce very different bills, and two states with very different rates can produce similar bills. Most of that comes from how property is valued for tax purposes.
Some states assess homes at full market value. Others use a fraction, and assessment ratios of 10% to 15% are common in parts of the South. That mechanically produces a lower bill even when the millage rate on paper looks high.
Statutory caps on assessment growth add another layer. California’s Proposition 13 limits the general levy to 1% of assessed value and restricts annual assessment increases to 2% unless the property changes hands or undergoes new construction. A homeowner who bought in 1990 may be assessed at a fraction of what an identical neighbor who bought in 2024 pays. Texas currently limits homestead appraisal increases to 10% per year, with proposals to tighten that to 3%. These caps benefit long-term owners and shift more of the burden onto recent buyers.
The practical takeaway if you are considering a move: the effective rate applied to your purchase price matters more than the statewide median bill, because that median reflects a mix of long-term owners on old assessed values and recent buyers on current ones.
Exemptions That Cut Your Bill
Most states offer property tax exemptions that can substantially reduce what you owe, but you almost always have to apply. Nothing happens automatically.
Homestead exemptions are the most common. They reduce the taxable value of a primary residence, and the specifics vary widely. Some states exempt a flat dollar amount, ranging roughly from $10,000 to $200,000 of assessed value. Florida and Texas apply no dollar cap for certain purposes. New Jersey, Pennsylvania, and Virginia offer no standard homestead exemption at all.
Senior citizen programs typically add deeper relief through tax freezes or additional exemptions once you reach a qualifying age, usually 65. Many carry income or net worth limits. Colorado exempts 50% of the first $200,000 in actual value for qualifying seniors who have owned and occupied their home for at least 10 years.
Disabled veterans often qualify for the most generous relief available. In many states, a 100% service-connected disability rating from the VA entitles you to a full exemption on your primary residence with no income limits. Partial disability ratings usually produce proportional reductions. Veterans who qualify should apply as soon as they purchase a home.
The Federal SALT Deduction
Property taxes are deductible on your federal return if you itemize, but only up to the combined state and local tax (SALT) cap. Under the Tax Cuts and Jobs Act of 2017, that cap was $10,000. Starting in 2025, Congress raised it to $40,000, with the cap increasing 1% each year through 2029. For 2026, the cap is $40,400.5Bipartisan Policy Center. How Does the 2025 Tax Law Change the SALT Deduction
The cap covers state income taxes, local income taxes, sales taxes, and property taxes combined. A New Jersey homeowner paying $10,000 in property tax and $8,000 in state income tax claims $18,000 against the $40,400 cap with room left. Under the old $10,000 cap, the same taxpayer could deduct only $10,000 total. High earners face a further reduction: taxpayers in the top 37% bracket see their SALT deduction trimmed by 5%.
The cap is scheduled to reset to $10,000 in 2030 unless Congress acts again. That sunset matters if you are making long-term relocation decisions partly on the strength of the current deduction.
Appealing an Assessment You Think Is Too High
Your bill is only as accurate as the assessed value behind it, and assessors get it wrong more often than most people realize. Only about 3% to 5% of homeowners file formal appeals. Of those who do, roughly 30% to 50% win some reduction.
The strongest grounds fall into two categories. The first is factual error: wrong square footage, three bathrooms listed when you have two, a carport counted as a finished garage. A phone call to the assessor’s office with documentation sometimes resolves these without a formal appeal. The second is unequal assessment, where your property is valued significantly higher than comparable homes nearby. If your assessment per square foot runs 10% or more above similar properties on your street, that is solid ground for a reduction.
Deadlines are strict and vary by jurisdiction. Most places give you 30 to 90 days after the assessment notice, and missing the window usually means waiting a full year. When you file, bring recent comparable sales, photos of any condition issues the assessor may not have seen, and records of any factual errors. Filing fees, where they exist, generally run between nothing and $175.