Though property taxes are generally set by local authorities such as cities, counties, and school boards, states often establish parameters in order to keep tax rates somewhat uniform. Each state, however, has different parameters, and as a result, what homeowners end up paying out of pocket can vary considerably from state to state.
In some parts of the country, property taxes are so low as to be almost trivial. In others, however, they can be a major financial burden.
Using data from tax policy research organization the Tax Foundation, 24/7 Wall St. reviewed total annual property tax collections as a share of the total value of owner-occupied housing units at the state level to identify the states with the lowest property taxes.
It is important to note that a low property tax rate does not necessarily mean a low overall tax burden. State and local governments need to meet their financial obligations one way or another, and a low effective property tax rate can often mean that other tax rates, like sales or income taxes, might be higher.
To determine the state with the lowest property taxes, 24/7 Wall St. calculated the effective property tax rate — the total amount of property taxes paid annually as a percentage of the total value of all occupied homes — for all 50 states using data from the U.S. Census Bureau’s 2019 American Community Survey. Data on median home value, median household income, and population also came from the 2019 ACS. Data on state and local property tax revenue used to calculate per capita property taxes came from the Census Bureau’s 2018 Annual Survey of State and Local Government Finances and were adjusted for the adult population using the total number of residents 18 years and up.
Hawaii is the state with the lowest aggregate property taxes paid at 0.31% of state home value. Per capita property taxes total $1,362 which is the 21st lowest among all states. The median home value at $669,200 is the highest among all states. The homeownership rate at 60.2% is the 4th lowest.
The median household income in Hawaii is $83,102, the fourth highest.