Property taxes vary enormously across the United States. A homeowner in New Jersey might pay more than six times the effective rate of a homeowner in Hawaii for a similarly valued home. Understanding these differences is critical whether you're buying a new home, relocating for retirement, or simply trying to understand why your tax bill looks the way it does.
Quick Facts
- Highest effective rate: New Jersey at ~2.49% — a $400,000 home pays ~$9,960/year.
- Lowest effective rate: Hawaii at ~0.28% — a $400,000 home pays ~$1,120/year.
- National median: Approximately 1.0%–1.1% effective rate.
- States without income tax (like TX, NH) tend to have higher property tax rates.
How we compare: effective tax rates
Comparing property taxes across states is tricky because each state uses different assessment ratios, mill rates, and exemption structures. A state with a high mill rate but a low assessment ratio might result in a lower actual tax burden than a state with a moderate mill rate and a 100% assessment ratio.
To make fair comparisons, we use the effective tax rate — the total annual property tax paid as a percentage of the home's fair market value. This number strips away the confusing local math and shows you the true tax burden as a simple percentage. An effective rate of 1.50% means you pay $1.50 in property tax for every $100 of your home's market value.
The 10 highest property tax states
These states consistently rank among the most expensive for property tax burdens. If you own a $400,000 home in these states, here is what you can expect to pay annually:
| Rank | State | Effective Rate | Annual Tax on $400K Home |
|---|---|---|---|
| 1 | New Jersey | 2.49% | $9,960 |
| 2 | Illinois | 2.23% | $8,920 |
| 3 | New Hampshire | 2.18% | $8,720 |
| 4 | Connecticut | 1.98% | $7,920 |
| 5 | Vermont | 1.83% | $7,320 |
| 6 | Texas | 1.80% | $7,200 |
| 7 | Wisconsin | 1.76% | $7,040 |
| 8 | Nebraska | 1.73% | $6,920 |
| 9 | New York | 1.72% | $6,880 |
| 10 | Rhode Island | 1.63% | $6,520 |
Notice that several states on this list — New Hampshire and Texas — have no state income tax. These states rely more heavily on property taxes to fund government services, resulting in higher property tax burdens. New Jersey and Illinois have both high property taxes and state income taxes, which contributes to their reputation for high overall tax burdens.
The 10 lowest property tax states
On the other end of the spectrum, these states offer the most favorable property tax environments:
| Rank | State | Effective Rate | Annual Tax on $400K Home |
|---|---|---|---|
| 1 | Hawaii | 0.28% | $1,120 |
| 2 | Alabama | 0.40% | $1,600 |
| 3 | Colorado | 0.51% | $2,040 |
| 4 | Louisiana | 0.55% | $2,200 |
| 5 | Delaware | 0.56% | $2,240 |
| 6 | D.C. | 0.56% | $2,240 |
| 7 | South Carolina | 0.57% | $2,280 |
| 8 | Wyoming | 0.57% | $2,280 |
| 9 | West Virginia | 0.59% | $2,360 |
| 10 | Nevada | 0.60% | $2,400 |
Hawaii's exceptionally low rate reflects several factors: high home values that generate significant revenue even at low rates, a broad state income tax that funds many services, and constitutional limits on property tax growth. Colorado's low rate is partly due to its Taxpayer's Bill of Rights (TABOR), which restricts how much governments can increase revenue year over year.
What drives the differences?
Several factors explain why property tax rates vary so dramatically across states:
Revenue structure
States that rely on a diverse mix of revenue sources — income taxes, sales taxes, and property taxes — can keep any single tax type lower. States that lean heavily on one or two sources tend to push those rates higher. States with no income tax (Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming) often compensate with higher property or sales taxes.
Home values
States with very high home values (like Hawaii and California) can generate substantial revenue even with low tax rates because the tax base (total assessed value) is so large. Conversely, states with lower home values may need higher rates to generate the same amount of revenue per capita.
Local government fragmentation
States like Illinois, New Jersey, and New York have a large number of independent local taxing entities — school districts, fire districts, library districts, park districts, mosquito abatement districts, and more. Each entity sets its own levy, and they stack on top of each other. This fragmentation tends to push total property tax rates higher.
Assessment practices
How often and how accurately properties are assessed varies widely. States that reassess infrequently may have assessed values that lag behind actual market values, resulting in lower effective rates that don't reflect the true tax burden on recently purchased homes.
Constitutional and statutory limits
Some states have constitutional provisions that limit property tax growth. California's Proposition 13 (1978) caps the tax rate at 1% of purchase price and limits assessment increases to 2% per year. Colorado's TABOR requires voter approval for tax increases. These provisions keep effective rates lower but can create disparities between long-time homeowners and recent buyers.
Property taxes and the cost of homeownership
When evaluating the true cost of owning a home, property taxes are a crucial factor that many buyers overlook. A home with a $1,500 monthly mortgage payment in New Jersey might have an additional $800/month in property taxes, while the same mortgage payment in Hawaii might come with only $100/month in property taxes.
Over a 30-year mortgage, these differences compound into hundreds of thousands of dollars. A homeowner paying $8,000/year in property taxes pays $240,000 over 30 years (not accounting for rate increases), while one paying $1,500/year pays only $45,000 — a difference of nearly $200,000.
This is why many retirees consider relocating to low-property-tax states. The savings on property taxes alone can fund years of retirement expenses.
A note on local variation
It's important to remember that the state-level averages shown above are just that — averages. Within any given state, actual rates can vary significantly from county to county and even between neighboring municipalities. For example:
- In Texas, effective rates range from about 1.2% in some rural counties to over 2.5% in parts of the Dallas-Fort Worth area.
- In New York, rates in New York City (~0.88%) are much lower than in upstate counties like Monroe County (~2.6%).
- In California, Proposition 13 means long-time homeowners pay dramatically less than recent buyers of identical homes.
Our property tax calculator uses state-level average effective rates, which provides a reliable baseline estimate. For precise local rates, check with your county assessor's office.
International perspective
Property taxes are not unique to the United States. Most countries impose some form of recurring tax on real property, though the rates and structures vary enormously:
- Canada: Similar system to the US, with rates varying by province. Ontario averages ~1.08% effective rate.
- United Kingdom: Uses a band-based Council Tax system rather than a percentage of value.
- Australia: Land tax (not building value) varies by state, generally 0.2%–2% of unimproved land value.
- India: Property tax rates are set by municipal corporations and are generally quite low by Western standards.
- Japan: Standard rate of 1.4% of assessed value, which is typically 60%–70% of market value.
Our calculator covers 190+ countries and 500+ regions worldwide. Select your country and region to see how your property taxes compare globally.
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