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The States With the Lowest Car Tax

By John Rosevear - Updated Oct 2, 2018 at 9:27PM

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State vehicle property taxes vary widely. How does your state stack up?

How high is your "car tax"?

State property taxes on real estate and on cars turn out to vary widely -- and not necessarily in the ways that you'd expect.

While it's not much of a surprise that "red" states (the ones that voted Republican in the 2012 presidential election) tend to have lower real estate property taxes than the "blue" states that voted Democratic in 2012, it sometimes works out the other way around when it comes to vehicle property taxes.

A toy car next to stacks of coin and dice reading TAX

Image source: Getty Images.

A recent analysis by showed that the average red state resident pays a vehicle property tax of $238, while the average levy in blue states is actually a bit lower at $212. And while 14 blue states (plus the District of Columbia, which went for President Obama in 2012) have no vehicle property taxes at all, that's only true of nine red states.

I'll give away the ending right now: Those 23 states (and the District of Columbia) tied for first in our rankings -- it's hard to beat no taxes at all! But you might be very surprised by a few of the other names on our list of states with the lowest car tax.

Here's the list.

10. North Carolina

The Tar Heel State is pretty inexpensive when it comes to property taxes, relatively speaking. It's 19th cheapest when it comes to real estate property taxes, according to WalletHub, and it's a solid 10th on our car tax list. Residents pay an average of $294 a year on vehicle property taxes, WalletHub says.

9. Kentucky

Properly called the Commonwealth of Kentucky, the Bluegrass State is just one of four U.S. states constituted as a "commonwealth." (Can you name the other three?) It went for Bill Clinton twice, but it has voted Republican in all of the presidential elections since. Kentucky is 18th-lowest in WalletHub's real estate property tax ranking, and it's ninth on our list with an average vehicle property tax of $286.

8. Arkansas

Bill Clinton's home state is a pretty deep shade of red these days, and it shows on the taxation front -- at least when it comes to state property taxes. Arkansas ranks an inexpensive eighth on WalletHub's list of the states with the lowest real estate property taxes, and it's eighth in our car tax rankings, too. Arkansas residents pay an average of $239 a year in state vehicle property taxes.

7. Iowa

The Hawkeye State went for President Obama in 2012, but it's really a "swing" state -- its residents are pretty closely divided, politically speaking. Its property taxes are also divided: Iowa's hefty real estate property taxes place it 38th in WalletHub's rankings, but its modest car tax gives it seventh place on our list. Iowa residents pay an average of $230 a year in state vehicle property taxes.

6. Alabama

Alabama hasn't gone blue in a presidential election since it went for Jimmy Carter way back in 1976. They don't like property taxes: Alabama has the second-lowest real estate property tax, and the sixth-lowest car tax. Alabama residents pay an average of $170 a year in state vehicle property taxes.

5. Utah

The Beehive State is about as red as a state gets -- Utah hasn't gone to the Democrats in a presidential election since 1964, and recent elections have not been close. Not surprisingly, Utah's state legislators have a light hand with the property-tax hammer. The state ranks 11th-lowest on the real estate tax list, and it's fifth lowest on ours. Utah residents pay an average of $150 a year in state vehicle property taxes.

4. California

Here's the big surprise. California has a national reputation as a high-tax nightmare (and to be fair, when it comes to things like sales taxes, California isn't cheap.) But property taxes are a different story, thanks to a voter initiative way back in 1979 that capped the rate of increases. Despite the high cost of California real estate, the state ranks 17th-cheapest in real estate property taxes. And it's fourth on our car-tax list: California residents pay an average of $149 a year in state vehicle property taxes.

3. Michigan

The traditional home of the U.S. auto industry has gone for the Democrats in recent presidential elections, but Republicans control Michigan's Statehouse nowadays. That makes it a mixed bag when it comes to taxes: Michigan is an expensive 44th in WalletHub's rankings of states with the lowest real estate property taxes, but Michigan residents pay an average of just $110 a year in state vehicle property taxes.

2. Montana

Montana has been a red state in recent presidential elections, but it's really somewhat split: Republicans control the state legislature, but Governor Steve Bullock is a Democrat. Montana is 21st in WalletHub's rankings of states with the lowest real-estate property taxes, but residents pay an average of just $85 in state vehicle property taxes.

1. The states with no vehicle property taxes

Residents of Alabama, the District of Columbia, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Louisiana, Maryland, North Dakota, New Jersey, New Mexico, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Vermont, Washington, and Wisconsin pay nothing at all in state vehicle property taxes.

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