Property Tax by State: A Complete Breakdown

Property taxes are one of the biggest ongoing costs of homeownership, and they vary wildly depending on where you live. A $300,000 home in New Jersey might cost you over $7,000 a year in property taxes, while the same value home in Hawaii might cost less than $1,000. That difference of $6,000+ per year adds up to over $180,000 across a 30-year mortgage.

Whether you're buying your first home, considering a move, or just trying to understand your tax bill, knowing how property taxes work and where they're highest and lowest can save you a lot of money.

How Property Taxes Are Calculated

Property taxes are calculated using two numbers: the assessed value of your property and the local tax rate (also called the mill rate or millage rate). The basic formula is:

Annual Property Tax = Assessed Value x Tax Rate

Sounds simple, but both of those numbers are more complicated than they appear.

Assessed value

Your property's assessed value is determined by your local tax assessor, not by the market price you paid. In many jurisdictions, the assessed value differs from the market value. Some states assess at 100% of market value, while others assess at a fraction (often 10-50%).

Assessments typically happen on a regular cycle - annually in some places, every 2-5 years in others, and in some counties, even less frequently. Between reassessments, your tax bill might not change much even if market values swing significantly. But when reassessment happens, you could see a substantial jump.

Tax rate (mill rate)

The tax rate is set by local government bodies - county, city, school district, and sometimes special districts (water, fire, library). Each entity sets its own rate, and they're combined into your total rate. A "mill" is one-tenth of a cent, so a rate of 25 mills means you pay $25 for every $1,000 of assessed value. That's equivalent to a 2.5% rate.

Tax rates change annually based on the budgets of local government entities. If the school district needs more funding, the school portion of your tax rate may increase. This is why property taxes can go up even if your home's assessed value stays the same.

The Highest Property Tax States

Based on effective property tax rates (actual taxes paid as a percentage of home value), these states consistently top the list:

• New Jersey (2.23%): The perennial leader. On a $400,000 home, that's nearly $9,000 per year. High property taxes fund some of the best public schools in the country, but they're a major cost of living factor.
• Illinois (2.08%): Heavily dependent on property tax revenue, especially for school funding. The Chicago metro area has some of the highest rates in the state.
• Connecticut (1.96%): High home values combined with high rates make for substantial tax bills, especially in Fairfield County.
• New Hampshire (1.86%): No state income tax and no sales tax mean the state relies heavily on property taxes to fund local services.
• Vermont (1.83%): Small population and high per-pupil education spending drive rates up.
• Texas (1.74%): Another state with no income tax. Property taxes pick up the slack, and they're significant - especially in rapidly growing metro areas like Austin and Dallas.

The Lowest Property Tax States

On the other end of the spectrum:

• Hawaii (0.29%): The lowest effective rate in the nation. But don't get too excited - median home values are among the highest in the country, so the dollar amount can still be significant.
• Alabama (0.39%): Low property values and agricultural exemptions keep rates very low.
• Colorado (0.51%): The Gallagher Amendment (repealed in 2020, with effects still phasing in) historically kept residential assessment rates low.
• Louisiana (0.55%): Generous homestead exemptions and low assessment ratios keep effective rates down.
• South Carolina (0.56%): Primary residences are assessed at just 4% of market value, compared to 6% for other properties.
• West Virginia (0.57%): Low home values and assessment ratios result in modest tax bills.

How Property Tax Fits Into Your Overall Tax Picture

Property taxes interact with your other taxes in important ways. If you itemize deductions on your federal return, you can deduct state and local taxes (SALT) including property taxes, but the deduction is capped at $10,000 per year. For homeowners in high-tax states, this cap can significantly limit the benefit.

Use the tax calculator below to see how property taxes fit into your overall federal tax situation.

Homestead Exemptions

A homestead exemption reduces the taxable value of your primary residence, directly lowering your property tax bill. Most states offer some form of homestead exemption, though the details vary enormously.

Common types of homestead exemptions:

• Fixed dollar amount: A set amount is subtracted from your assessed value. For example, Texas offers a $100,000 homestead exemption for school district taxes. On a home assessed at $350,000, you'd only pay school taxes on $250,000.
• Percentage reduction: A percentage of your assessed value is exempt. South Carolina exempts primary residences from all school operating taxes.
• Senior exemptions: Additional exemptions for homeowners over 65 or disabled homeowners. In many states, seniors get an extra $10,000-50,000 exemption or a freeze on their assessed value.
• Veteran exemptions: Reduced or eliminated property taxes for veterans, especially those with service-connected disabilities. Some states exempt 100% of property tax for disabled veterans.

Homestead exemptions usually require an application - they're not automatic. If you own your primary residence and haven't filed for your homestead exemption, you may be overpaying. Contact your local tax assessor's office or check their website.

How to Appeal Your Property Tax Assessment

If you believe your property is assessed too high, you can appeal. This is more common and more successful than most people realize. Studies suggest that 30-40% of properties are over-assessed, and a significant percentage of appeals result in reduced assessments.

Here's how the appeal process typically works:

1. Review your assessment notice. When you receive your annual notice, check the assessed value against recent comparable sales in your neighborhood. Also verify that the property details are correct (square footage, lot size, number of rooms, condition).
2. Gather evidence. Pull recent sale prices of similar homes nearby (same size, age, condition). If your home has issues that reduce value (needed repairs, noise, flooding risk), document them.
3. File the appeal on time. Deadlines are strict, typically 30-90 days after receiving your assessment notice. Miss the deadline and you're stuck for another year.
4. Attend the hearing. Most appeals start with an informal review with the assessor. If that doesn't resolve it, you can escalate to a formal hearing before a review board. Present your comparable sales data and any evidence of over-assessment.
5. Consider professional help. Property tax appeal firms work on contingency - they take a percentage of your savings if the appeal succeeds. For high-value properties, this can be worth it.

Property Taxes and Home Buying Decisions

Property taxes should be a major factor in your home buying decision, especially when comparing homes in different jurisdictions. Two homes with the same price and mortgage payment can have dramatically different total monthly costs because of property tax differences.

Consider this comparison for a $350,000 home:

• New Jersey (2.23% rate): $7,805/year, or $650/month added to your housing payment
• Texas (1.74% rate): $6,090/year, or $508/month
• Florida (0.86% rate): $3,010/year, or $251/month
• Hawaii (0.29% rate): $1,015/year, or $85/month

The difference between the highest and lowest is $565 per month, which is the equivalent of about $95,000 in additional borrowing capacity on a 30-year mortgage. In other words, in a low-tax state, you could afford a significantly more expensive home for the same total monthly payment.

But don't just chase low property taxes. States that rely less on property taxes often make up the revenue with higher income taxes, sales taxes, or both. Texas has no income tax but high property taxes. California has lower property taxes (thanks to Proposition 13) but the highest state income tax rates in the country. The total tax burden is what matters, not any single tax.

The Bottom Line

Property taxes are an unavoidable cost of homeownership, but they're not out of your control. Understand how your assessment is calculated, file for every exemption you qualify for, appeal if you're over-assessed, and factor property taxes into any home buying or relocation decision. The difference between a high-tax and low-tax location can easily amount to six figures over the life of a mortgage. That's too much money to ignore.