How Much Property Tax Do YOU Pay?
Every state has some sort of property tax. Although these taxes are most often associated with real estate, some states also charge taxes for vehicles and other assets. Rates can vary from very low to extremely high, and there are also other types of taxes that can balance property tax rates in a way that the overall impact on citizens is basically the same.
Property taxes provide the revenue the states require to keep running and generate vital services for their residents. School districts are one of the categories that rely significantly on these taxes; the revenue also supports the city financially and also the salaries of its workers — first responders are also included here — as well as sewer, water, and other services.
If you are wondering how low property taxes may go — maybe you are considering relocating, or you’re just curious — this article has all the numbers you’re looking for. Here you’ll find a list of 10 states with the most favorable property taxes.
We’ve also added some other information like each state’s average house value, effective property tax rate, median household income, and annual taxes on a median-valued property — to help you put the tax rates into context.
Can you guess which some of those states are?
1. Hawaii
- Average House Value in 2022: $828,002
- Effective Property Tax Rate in 2019: 0.31%
- Median Household Income in 2019: $83,102
- Annual Taxes on a Median-Priced Property: $2,566.81
According to several studies, Hawaii has been the state with the lowest effective property tax rate in the US since 2019. However, the average price for a house in Hawaii is $828,002 — the highest of the 10 states on this list. This means that this state’s homeowners may still have to pay a hefty tax bill.
Hawaii has the second-highest median household income of any state (Washington, D.C., ranking in the first spot). In spite of this major advantage, Hawaii also has the highest cost of living (measured by the Consumer Price Index) out of all 50 states as of 2021.
2. Alabama
- Average House Value in 2022: $189,976
- Effective Property Tax Rate in 2019: 0.37%
- Median Household Income in 2019: $51,734
- Annual Taxes on a Median-Priced Property: $702.91
Alabama has low home prices as well as a property tax rate that is far lower than the national average ($325,677 as of January 2022). So, as a homeowner, this would be the most affordable state to live in.
Not only does Alabama have a more humble property tax rate, but it’s also one of the most affordable places to live overall, ranking third in the whole country in terms of cost of living in 2021.
Don’t get too excited, though, because Alabama has quite a high poverty rate, as almost 16% of the state’s population is living in destitution (according to 2019 data).
3. Louisiana
- Average House Value in 2022: $203,222
- Effective Property Tax Rate in 2019: 0.51%
- Median Household Income in 2019: $51,073
- Annual Taxes on a Median-Priced Property: $1,036.43
Louisiana is another state on this list that has both low house prices and property tax rates that are significantly lower than the national average.
In 2021, Louisiana’s gas tax was 20 cents a gallon, one of the lowest in the whole country. Also, even if its cost of living wasn’t the lowest, it was still above the average of the other 34 states and the District of Columbia.
As is the case with Alabama, Louisiana’s overall affordability is offset by its pretty high poverty rate of 19%.
4. Wyoming
- Average House Value in 2022: $303,325
- Effective Property Tax Rate in 2019: 0.51%
- Median Household Income in 2019: $65,003
- Annual Taxes on a Median-Priced Property: $1,546.96
The average house value in Wyoming isn’t as affordable as in some of the other states on this list, but its residents don’t have to pay any state income tax. Also, Wyoming’s sale tax rate is 4% — the lowest in the US.
While this state’s cost of living was moderate in 2021, its median household income was a solid one. On top of this, the state also had a lower poverty rate than the majority of states in 2019.
When it comes to gas tax rates, Wyoming also marks on the lower side with 24 cents per gallon.
5. Colorado
- Average House Value in 2022: $545,794
- Effective Property Tax Rate in 2019: 0.52%
- Median Household Income in 2019: $77,127
- Annual Taxes on a Median-Priced Property: $2,838.13
Colorado has a low effective property tax rate, but house prices are quite high there, which means that homeowners have to pay $2,838.13 a year on a median-priced property — the second-highest annual taxes of any state on this list.
And yet, Colorado has the second-highest median household income on our list, which may help that financial burden seem relatively affordable.
Its 9.3% poverty rate is on the lower side, which may also be an advantage.
6. South Carolina
- Average House Value in 2022: $261,882
- Effective Property Tax Rate in 2019: 0.53%
- Median Household Income in 2019: $56,227
- Annual Taxes on a Median-Priced Property: $1,387.97
South Carolina has an effective property tax rate of 0.53% (the same as West Virginia). In terms of cost of living measurements, South Carolina has a major advantage due to its typical home values.
Outside of its rather higher utility costs, other cost-of-living categories were quite low in 2021 in South Carolina. Despite all of these economic advantages, like many other Southern states, South Carolina has a high poverty rate of 14.7%.
7. West Virginia
- Average House Value in 2022: $126,948
- Effective Property Tax Rate in 2019: 0.53%
- Median Household Income in 2019: $48,850
- Annual Taxes on a Median-Priced Property: $672.82
West Virginia has the lowest housing costs in the US due to its modest home process and low effective property tax rate. In 2021, its overall cost of living as well as its gas tax rate placed the state among the top 10 in the US.
However, West Virginia had a poverty rate of 16% in 2019 — significantly higher than the national average, as was its local and combined state sales tax rate of 7.46% (in 2021).
8. Utah
- Average House Value in 2022: $529,509
- Effective Property Tax Rate in 2019: 0.56%
- Median Household Income in 2019: $75,780
- Annual Taxes on a Median-Priced Property: $2,965.25
Utah has some of the highest property tax rates on this list due to its higher effective tax rate, as well as its highest average-priced houses of any of the 10 states mentioned here.
On top of this, Utah’s combined sales & local tax rate, as well as its gas tax rates, are greater than most.
On the bright side, Utah had a high median household income of $75,780 in 2019.
9. Delaware
- Average House Value in 2022: $332,115
- Effective Property Tax Rate in 2019: 0.59%
- Median Household Income in 2019: $70,176
- Annual Taxes on a Median-Priced Property: $1,959.48
Compared to some other US states, Delaware has a pretty favorable property tax rate. When it comes to this list, however, Delaware is rather on the higher side due to its higher property taxes and its above-average typical house values.
Delaware also had a moderate poverty rate of 11.4% in 2020, and a higher cost of living in all categories except for utilities in 2021.
Yet, Delaware has no sales tax, which is an added bonus. Also, its median household income was on the higher side in 2019.
10. Arkansas
- Average House Value in 2022: $166,566
- Effective Property Tax Rate in 2019: 0.61%
- Median Household Income in 2019: $48,952
- Annual Taxes on a Median-Priced Property: $1,016.05
Low housing costs coupled with low effective property taxes contribute to Arkansas’ attractive cost of living. The state’s gas tax was 25 cents per gallon in 2021, significantly lower than the national average.
However, sales taxes in Arkansas were on the upper limit, with a combined state and local sales tax rate of 9.51% (ranking fourth highest in the US).
To conclude, while all 51 states (Washington included) have property taxes, there are some states that levy favorable ones. Some people, however, may be exempted from paying property tax.
There are also some states that offer homestead exemptions; other kinds of exemptions may be available for military veterans, people with disabilities, older homeowners, and homeowners who install renewable energy systems (such as solar panels) or make certain renovations.
Want to read more tax-related articles? Here is another one you may also like: These 9 States Have No Income Tax!
