Guide to U.S. Property Taxes: States with the Lowest & Highest Rates

As you may well know, paying property taxes is one of the more frustrating parts of home ownership. Whether you’re a homeowner, a real estate investor, a landlord with many units, or a retiree, recurring property taxes may feel like an endless strain on your wallet.

Property taxes play an essential role in the community and can vary significantly from state to state, with some states pushing taxes to the threshold while others find ways to reduce the strain on homeowners. But do any states have zero property tax? Unfortunately, all states enforce some kind of property tax on their residents.

In this guide, we’ll do a deep dive into property taxes, why there are no states without property tax, and which states have the highest and lowest tax rates. We’ll also discuss how property management software can help landlords in a variety of ways, including budgeting properly for property taxes with powerful rental accounting software.

Understanding Property Taxes in the U.S.

So, what are property taxes, exactly?

Property taxes are a significant source of revenue for local and state governments and are used to fund essential public services, like schools, infrastructure, first responders and emergency services, and other government operations. These taxes are typically based on a property’s value, assessed by the city or state, and are collected annually or semi-annually.

The amount each homeowner pays for property tax can vary based on several factors, including local laws, property value, and exemptions, and is typically calculated based on a transparent formula.

How are property taxes calculated?

Understanding property taxes is essential for both investors and homeowners, as every state imposes them. Planning for these taxes each year is crucial.

At the most basic level, you can calculate property taxes with this simple equation:

Property tax = Assessed home value x Local tax rate

Digging in a little further, we’ll find:

• Assessed home value: The property’s value as determined by the local tax assessor. This value may be recalculated annually and can fluctuate based on market conditions and other factors. In some areas, local governments cap the rate of increase.
• Local tax rate: Each city, county, or municipality will set their own tax rate, which can fluctuate from year to year
• State tax policies and exemptions: Some states offer tax breaks for seniors or veterans and may incentivize environmentally-friendly improvements to a home, among other exemptions.

If you own multiple rental properties, tracking property taxes can be easier with landlord software like TurboTenant. It helps landlords manage finances with accounting tools, collect rent online to maintain cash flow and streamline lease agreements when securing new tenants.

Why do property tax rates vary?

Although every state has property taxes, rates vary significantly from state to state. Some locales have found alternative revenue sources to supplement their municipal activities, while others rely on the sheer size of their property tax base instead of charging higher rates.

• Alternative revenue sources: Some states find significant income from characteristics unique to their state. For instance, Hawaii has a lower-than-average property tax rate due to its booming tourism industry. While Washington, D.C. has higher than average property values, which can spread the tax burden among the community, leading to a lower overall tax rate.
• Local government funding needs: A community’s needs are vital in determining the local property tax rate. Areas that place a higher value on government services, social services, and ever-improving infrastructure require a higher property tax rate to meet the community’s demands.
• Tax exemptions & deductions: Some states offer more incentives or tax breaks for homeowners, which can significantly affect how they calculate property taxes. For instance, Florida offers a homestead exemption that reduces a property’s taxable value if the owner meets specific criteria. Some states offer property tax relief for seniors, while others offer tax breaks for agricultural properties.

Do any states have no property tax?

Despite common myths and wishful thinking, no U.S. state is free from property taxes. Although this may disappoint some, many states still manage to maintain relatively low tax rates.

To keep property tax rates low, certain states rely on factors like:

• Higher sales tax: States such as Tennessee and South Dakota raise revenue by implementing a higher sales tax rate. This approach ensures that money spent by both residents and visitors has a greater financial impact on the community.
• Revenue from tourism: Tourism can be big business, especially if you live in states like Florida, Nevada, and Hawaii, each of which brings in billions in annual revenue. This influx of tourism dollars boosts state income, often allowing for lower property tax rates for homeowners.
• Energy and mineral taxes: Some regions of the country are rich in natural resources specific to their area. Wyoming and Alaska, for example, have abundant oil, gas, and mineral resources. Taxes on these industries help offset residents’ tax burdens, allowing for lower property tax rates in these states.
• Corporate and business taxes: Some states, like Delaware, generate significant revenue each year through favorable business tax laws, which attract corporations and offset some of the burden on residential taxpayers.
• Gambling and lottery revenue: Massachusetts, for example, generates millions in tax revenue through its long-running state lottery. While the state has relatively high property tax rates, this additional revenue helps fund comprehensive social services, reducing the need for high property taxes.

In the next section, we’ll review the states with the country’s highest and lowest property taxes. Again, no matter how much we all wish it were true, there are no states with no property tax in the United States.

Top 15 States with the Lowest Property Tax Rates in 2025

Since there are no states with no property tax in the country, here are the 15 states with the lowest effective property tax rate in the US.

(States are ranked starting from the lowest effective property tax rate.)

1. Hawaii – 0.28%

Hawaii property owners enjoy the lowest property tax rates in the United States, largely due to the state’s thriving tourism industry that generates significant tax revenue. Additionally, high property values in the Aloha State allow it to collect adequate property tax revenue while keeping its rates extremely low.

2. Alabama – 0.41%

Alabama’s property tax rate comes in as the second lowest due mainly to its favorable tax policies for homeowners, limited social services, and extensive agricultural land that qualifies for tax incentives and exemptions.

3. Louisiana – 0.52%

Louisiana keeps its property tax rates low due to homestead exemptions that drastically reduce the primary residence’s taxable value and lower the homeowner’s property tax burdens as a result. A homestead exemption encourages people to buy homes and keeps property taxes manageable, a win-win for everyone involved.

4. Delaware – 0.55%

While Delaware isn’t one of the mythical states without property tax, it is one of the few states with no state sales tax. A lack of state sales tax often attracts businesses and consumers who might otherwise shop or do business in neighboring states.

This increased economic activity boosts revenue through business taxes and fees, reducing reliance on high property taxes to fund public services.

5. Washington D.C. – 0.56%

We’ve established that no states are free from property taxes, and the same applies to Washington, D.C., the nation’s only district. D.C.’s property tax rates remain relatively low due to a high concentration of federal jobs with above-average incomes, reducing the need for higher tax rates.

Additionally, much of the district’s land is federally owned and tax-exempt, which forces the local government to rely more on federal funding and business taxes. High commercial property values also help offset a significant portion of the residential property tax burden.

6. South Carolina – 0.57%

South Carolina builds its tax policies around attracting retirees and seniors, maintaining low property taxes, and offering favorable exemptions and deductions for people over 65. As with Louisiana, South Carolina also has a homestead exemption, which can drastically reduce the homeowner’s taxable home value.

7. West Virginia – 0.58%

West Virginia’s low cost of living and overall population, directly leads to a lower property tax rate. Additionally, lower home values influence the state’s lower overall effective property tax rate for residents.

To compensate for low home values and a miniscule property tax rate, West Virginia benefits from a strong coal and natural gas industry, which boosts the state’s overall tax revenue.

8. Wyoming – 0.61%

While Wyoming is sparsely populated, it plays host to vast coal, oil, and natural gas reserves. Furthermore, the state imposes no personal or corporate income taxes but instead relies heavily on revenue from its natural resources. Severance taxes and mineral royalties also contribute to the state’s budget which helps keep property taxes down.

9. Arkansas – 0.63%

Arkansas provides substantial tax relief programs for senior citizens, veterans, and low-income homeowners, resulting in tax-friendly policies for residents. Higher state sales and income taxes partially offset this and help maintain lower property tax rates.

10. Mississippi – 0.65%

Mississippi has some of the country’s lowest government and public service spending, reducing the state’s overall funding needs. They’ve also passed homestead exemptions, but the state’s overall slow population growth keeps government needs in check, preventing the need to raise property taxes on homeowners.

11. Utah – 0.66%

In contrast to Mississippi, Utah boasts a rapidly growing population and residents who tend to stay put rather than move elsewhere. As such, the state’s tax burden is distributed across a larger population, reducing the need for steep property tax rates.

Utah also boasts a strong economy and enacts property tax exemptions for primary residences to help keep tax rates lower than the national average.

12. New Mexico – 0.67%

A large portion of land in New Mexico is federally owned, reducing the taxable base and helping to keep property taxes low. As with several other states on this list, New Mexico benefits from revenue in the oil and gas sector and offers property tax exemptions for veterans, disabled residents, and low-income homeowners.

13. Tennessee – 0.68%

Tennessee isn’t without property tax (no states are), but it is one of the few with zero income tax. Despite this reality, property taxes remain low due to the state’s reliance on its high sales tax revenue. Tennessee also benefits from a strong tourism industry, with major attractions like Nashville, the Smoky Mountains, and Dollywood bringing in significant cash.

Additionally, The Volunteer State provides property tax relief programs for seniors and disabled homeowners, which help keep the overall effective property tax rate well below the national average.

14. Idaho – 0.69%

Idaho’s real estate market is growing, yet property tax rates remain well below average due to the state’s balanced tax structure. Policies that limit excessive tax increases, such as homeowner exemptions that reduce taxable home values, also help keep rates down.

Furthermore, Idaho’s diverse economy, which is driven by agriculture, manufacturing, and technology, supports state revenue without the need for rising property taxes.

15. Colorado – 0.70%

Colorado has resident-friendly tax laws, including caps on residential property tax that prevent excessive and immediate increases in tax rates. The Centennial State also has a booming economy, driven primarily by technology and tourism, which bring in significant revenue and lessen the tax burden for homeowners.

Colorado also provides tax exemptions for senior citizens and disabled veterans, which can provide additional relief for those who qualify and lower the state’s average property tax rate.

Top 15 States with the Highest Property Tax Rates in 2025

Now that we know which states have the lowest property taxes in the country, let’s take a look at the other end of the spectrum. And, while property taxes are higher in these states, that doesn’t mean that real estate investors and landlords should overlook them as potential business opportunities.

TurboTenant can help landlords offset the burden of high property taxes by advertising their rental properties, screening prospective tenants, sending and receiving rental applications, generating state-specific lease agreements, and collecting rent online.

Without further ado, here are the states with the highest property taxes in the U.S.

(States are ranked starting from the highest effective property tax rate.)

1. New Jersey – 2.21%

New Jersey has the highest property taxes in the country, primarily due to its heavy reliance on tax revenue to fund schools, infrastructure, and other public services. Its proximity to New York City also increases property values, which further contributes to its sky-high tax burden.

2. Illinois – 2.05%

Illinois faces challenges related to high pension liabilities, which require a substantial flow of tax revenue to fund retirement obligations for public employees, leading to high property taxes. Bigger Illinois cities, Chicago in particular, have high property values and extensive government services, which leads to an increased tax rate.

3. New Hampshire – 2.03%

New Hampshire doesn’t impose a state income tax or a general sales tax, which leaves property taxes as the state’s primary revenue source for public services and government operations. The state’s high reliance on property taxes leads to noticeably higher rates than you’ll see in states with similar population densities.

4. Connecticut – 2.02%

Connecticut’s soaring property values and consistent demand for social services are the main culprits to its high property tax rates. With exceptional school systems and high infrastructure costs driven by volatile winters and hot summers, the state relies on collecting a significant portion of its income through property taxes.

5. Vermont – 1.90%

Vermont might have a small population, but it has a mighty demand for high-quality public services, such as excellent schools and extracurricular programs. The state funds a significant amount of its education budget through property taxes, which leads to some of the highest rates in the country.

6. Texas – 1.81%

Texas doesn’t impose a state income tax on its residents, so it instead relies heavily on above-the-national-average property taxes to fund public services. Cities like Austin and Dallas have also faced a rapid increase in property values without corresponding tax measures, leaving property tax burdens higher than average.

7. Nebraska – 1.77%

While some states can offset the need for higher property tax rates with alternative revenue streams, Nebraska is caught in the middle of high-density cities and large swaths of agricultural land with tax-break benefits. Because of those tax breaks (and the need for public funding), the state opts for a higher property tax program to pull in the money needed to cover its costs.

8. Wisconsin – 1.73%

At the state level, Wisconsin prioritizes quality public education, which means they need money to make it happen. They also tend to build programs around healthcare and infrastructure projects, which means property taxes make up a large percentage of that funding.

Wisconsin also lacks some of the alternative funding sources that some states can rely on, like tourism and natural resources.

9. Rhode Island – 1.69%

Some people choose to move to Rhode Island for its charm and the relative solitude of living in a small state. But, because of its small land area, dense population, and high property values, demand for public services is high, which leads to higher-than-average property tax rates.

And like some other states on this list, Rhode Island’s lack of major alternate revenue streams means that property taxes are responsible for making up a significant chunk of the budget each year.

10. Massachusetts – 1.64%

Within the past few years, Massachusetts has produced an explosive real estate market, sending property values through the roof. Couple that with an ever-increasing demand for high-quality public services like healthcare and first-rate education, which means property taxes stay high to compensate.

11. New York – 1.62%

New York’s overall effective tax rate is higher than it might be otherwise, primarily due to the high real estate prices in New York City. New York also has a complicated and extensive infrastructure, which is expensive to maintain and must be funded through property taxes, among other revenue sources.

12. California – 1.60%

While California’s Proposition 13 limits how much property taxes can increase yearly, the state’s high property values can still lead to large tax bills. Additionally, many local California governments rely on property taxes to fund schools, transportation, municipal services, and healthcare programs across the state.

13. Pennsylvania – 1.58%

Pennsylvania, one of the nation’s earliest states, faces high property tax rates due to its aging infrastructure and long-standing tax obligations. School funding also plays a major role, as local school districts rely heavily on property tax revenues to keep schools in good shape and competitive with other top educational systems nationwide.

14. Maine – 1.56%

With a small tax base and significant stretches of rural land, Maine depends heavily on property taxes to fund essential local services. The state’s long and cold winters increase maintenance costs for infrastructure, as well, which leads to the state’s need for higher property tax demands.

15. Oregon – 1.54%

Oregon does not have a state sales tax, meaning it relies more heavily on property taxes to make up the gap in funding for public services. The state has implemented property tax limits with Measure 5 and 50, but high home values in Portland and surrounding areas still contribute to high tax bills.

Key Takeaways for Homebuyers & Investors

Now that we can confidently say there are no states with no property tax, what does that mean for homeowners and investors? Well, just because a state does have property tax, it’s possible to find states with lower rates if you know where to look.

It’s clear that the states with the lowest property tax tend to offset the cost by finding alternative sources of revenue, like tourism or mining natural resources for cash. On the other hand, states with higher property taxes often don’t enact state income taxes or spend more money on public services, like schools and infrastructure.

Now that you’ve stopped looking for states with no property taxes and you’re ready to jump into home ownership, whether for yourself or a rental investment, don’t forget to consider how much property taxes might play a role in your bottom line.

And, while you’re at it, sign up for a free-for-life TurboTenant account today to start simplifying your property management operation immediately.

FAQ – States with No Property Tax & Property Tax Trends