The states with the lowest property tax rates
Hawaii, Alabama, Louisiana, and Mississippi have the lowest effective property tax rates in the country, all below 0.5 percent. Hawaii's rate is the lowest at roughly 0.28 percent of home value per year. West Virginia, South Carolina, and Arkansas follow close behind, each under 0.6 percent. These rates mean a homeowner with a $200,000 house pays anywhere from $560 per year in Hawaii to around $1,240 in Arkansas.
The lowest-tax states tend to fall into two categories: those with limited property tax systems altogether (like Hawaii, which relies heavily on other revenue sources), and those in the South where property values and assessment practices keep the effective rate low. Your actual bill depends on local assessments and exemptions, so two houses of equal value in the same state can have different taxes based on county or city rules.
Key Takeaways
- Hawaii, Alabama, Louisiana, and Mississippi charge less than 0.5 percent of home value annually, making them the four lowest-tax states.
- Effective tax rates vary by county and municipality within each state, so living in a low-tax state does not may provide the lowest bill in your area.
- Southern states dominate the low-tax list, while northeastern and midwestern states tend to have rates above 1 percent.
- Some low-tax states offer homestead exemptions or senior exemptions that reduce your bill further if you meet the requirements.
How property tax rates are calculated and why they vary
Property tax is a percentage of your home's assessed value, set by your county or municipality. A state's effective rate is the average across all properties in that state, but your individual rate depends on the assessor's valuation of your house and the local tax rate in your specific jurisdiction. Two neighboring counties in the same state can have rates that differ by 0.3 percent or more.
States with low effective rates often have lower assessment practices, meaning homes are valued at a smaller percentage of their market price. Louisiana, for example, assesses most residential property at 10 percent of market value, which keeps the effective rate low even though the nominal tax rate on that assessed value is higher. Hawaii's low rate reflects both low assessments and a state system that funds services differently than most states do.
The lowest-tax states ranked by effective rate
| State | Effective Tax Rate | Annual Tax on $200,000 Home |
|---|---|---|
| Hawaii | 0.28% | $560 |
| Alabama | 0.41% | $820 |
| Louisiana | 0.55% | $1,100 |
| Mississippi | 0.79% | $1,580 |
| West Virginia | 0.58% | $1,160 |
| South Carolina | 0.57% | $1,140 |
| Arkansas | 0.62% | $1,240 |
These figures are statewide averages and do not reflect local variation. A house in a wealthy suburb of a low-tax state may pay more than a house of the same value in a rural area of the same state. Always check your county assessor's website for your specific rate before making a move based on state averages.
The table above shows the seven states with the lowest effective rates. States beyond this list—such as Oklahoma, Kentucky, and New Mexico—have rates between 0.8 and 1 percent. The national average effective property tax rate is around 0.84 percent, so even states ranked eighth or ninth are still below the national median.
Homestead exemptions and other tax breaks in low-tax states
Many low-tax states offer homestead exemptions that reduce your assessed value or tax bill if you own and occupy the home as your primary residence. Alabama exempts $25,000 of assessed value for homeowners over 65. Louisiana allows homeowners to exempt up to $75,000 of home value from taxation. South Carolina offers a $50,000 exemption for owner-occupied homes. These exemptions stack on top of the already-low rates, making the actual bill even smaller for those who meet the requirements.
Senior citizens in several low-tax states may have access to for additional breaks. Mississippi allows homeowners 59 and older to freeze their property tax at the level it was when they turned 59. West Virginia offers a property tax credit for seniors and disabled homeowners based on income. Louisiana has a special assessment for elderly homeowners. Check your state's assessor website or county tax office to see which exemptions explore to your situation.
Why some low-tax states keep rates low
Hawaii's low rate exists partly because the state funds schools and services through income tax and other sources rather than property tax. The state also has a smaller population spread across islands, which changes how services are funded. Alabama and Louisiana have historically kept property tax rates low as a policy choice, even though this means less revenue for local schools and services compared to higher-tax states.
Southern states in general tend to have lower property tax rates because of regional tax policy traditions and because property values in rural areas keep the overall state average down. When a state includes both expensive urban properties and inexpensive rural land, the average effective rate can be pulled lower than in states where property values are uniformly high. This geographic mix matters as much as the tax policy itself.
What low property taxes mean for schools and services
States with low property tax rates often fund schools and local services through other revenue sources, such as sales tax, income tax, or state grants. This means a low property tax bill does not necessarily mean low-quality services—it depends on how the state chooses to raise and spend money overall. Some low-tax states have strong schools; others do not. The property tax rate alone does not tell you the full story about local funding.
If you are moving to a low-tax state for the property tax savings, research the school district and local services in your specific county. A county with a low property tax rate might have lower school funding than a county in a higher-tax state, or it might have the same funding from a different source. Your total tax burden—property tax plus state income tax, sales tax, and other fees—matters more than property tax alone.
Moving to a low-tax state: what to consider beyond the rate
A low property tax rate is one factor in the cost of homeownership, but not the only one. You also pay state income tax (or do not, in states with no income tax), sales tax, and local fees. Some low-tax states have high sales tax to compensate. Hawaii has no state income tax but charges a 4 percent state sales tax plus local taxes that can reach 4.5 percent. Louisiana has both income tax and sales tax. Calculate your total tax burden, not just property tax, before deciding to move.
Also consider that a low property tax rate in your state does not may provide a low rate in your county or city. Research the specific county and municipality where you plan to buy. Use your county assessor's website to find the local tax rate, and ask a local real estate agent about typical bills in the neighborhoods you are considering. The difference between counties in the same state can be larger than the difference between states.
Frequently Asked Questions
Do any states have no property tax?
No state has eliminated property tax entirely. Hawaii comes closest with the lowest effective rate in the nation at 0.28 percent. Some states offer exemptions for certain groups—such as seniors, veterans, or disabled homeowners—but all states collect property tax on at least some residential properties.
If I move to a low-tax state, will my property taxes stay low forever?
Property tax rates can change, and your assessed value can increase over time. Most states reassess property periodically, which can raise your bill even if the tax rate stays the same. Some states cap how much your assessment can increase per year, while others do not. Check your state's reassessment rules before buying.
Are low-tax states cheaper to live in overall?
Not necessarily. A low property tax rate is only one part of your total cost of living. You also pay income tax, sales tax, utilities, and insurance. Some low-tax states have high sales tax or income tax. Compare your total tax burden and cost of living in the specific city or county where you plan to move, not just the state property tax rate.
Can I claim a homestead exemption if I move to a low-tax state?
Most homestead exemptions require you to own and occupy the home as your primary residence, but rules vary by state. Some states require you to have lived there for a certain amount of time before you become may be able to access. Check your state and county assessor's website for the specific requirements in your area.
What is the difference between effective tax rate and nominal tax rate?
The nominal rate is the percentage applied to your assessed value. The effective rate is the average tax bill as a percentage of actual home value across the state. A state might have a high nominal rate but a low effective rate if homes are assessed at a low percentage of their market value. Effective rate is more useful for comparing states.