These 10 States Have the Lowest Property Tax in the Nation

by Brittney Myers | Published on Sept. 4, 2021

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A house and palm trees sitting on a grassy bluff overlooking the ocean.

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Property taxes aren't avoidable, but they are mitigable.

Owning a home comes with a lot of perks -- but it also comes with a good number of expenses. There are four main expenses nearly every homeowner contends with, and they're so common they've got a nifty acronym: PITI.

PITI stands for "Principal, Interest, Taxes, and Insurance." The first two refer to your mortgage loan; the principal is the amount you borrow, and the interest is the cost to borrow it. Homeowner's insurance is worth getting whether you have a mortgage or not, but most mortgages require it.

One part of PITI is completely and utterly unavoidable: taxes. Even if you pay cash for your home to avoid a mortgage and forego the security of insurance, you're still on the hook for property taxes.

States with the lowest property tax rates

Typically, both your state and your local municipality charge property taxes. This means property tax rates can vary within states.

That said, looking at a state average can be a good indicator of the property tax rate to expect, particularly when you compare it to the national average. For example, the 10 states with the lowest average effective property tax rates were all significantly below the national average of 1.1% in 2020:

  1. Hawaii: 0.28%
  2. Alabama: 0.41%
  3. Colorado: 0.51%
  4. Louisiana: 0.55%
  5. District of Columbia: 0.56%
  6. Delaware: 0.57%
  7. South Carolina: 0.57%
  8. West Virginia: 0.58%
  9. Nevada: 0.60%
  10. Wyoming: 0.61%

Property taxes are frequently based on your assessed property value. The effective property tax rate looks at the percentage of your property value that those taxes make up.

Where your property taxes go

What's known as your effective property tax rate is actually a collection of a dozen or more charges from the state and the local municipality. Each charge goes to a different local or state service. Some of the services that property taxes may go to include:

  • City garbage
  • County management
  • Fire service
  • Local schools
  • Public libraries
  • Public parks

Your town or county may also have other local charges. If you have a local zoo, for instance, property taxes may help keep it running. Some community colleges are also funded out of property tax income.

Other taxes to consider

States with low property taxes still need to pay for all those essential services. So if you pay a comparably low rate in property taxes, you may see higher tax rates in other areas. For example, you might have a high sales tax rate, or a particularly high state income tax rate.

In some cases, residents may not be paying most of the taxes. Hotel occupancy tax -- an extra fee tacked onto every hotel room booking -- and rental car tax can result in a great deal of revenue in states with lots of tourism, like Hawaii or Nevada.

Though property taxes are only a portion of your overall tax burden, if you'd rather lessen that particular cost, one of the states on the above list could be a good place to buy your next home.

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