If you're comparing states to live in, buy a home in, or relocate a business to, property tax rates can make a bigger difference than people expect. As of 2026, New Jersey has the highest effective property tax rate in the country at roughly 2.1% to 2.2% of home value, while Hawaii has the lowest at around 0.27% to 0.29%. The national average sits close to 0.99%. That's roughly a seven-times difference between the highest and lowest states, which can translate into thousands of dollars a year on an identically priced home.
This guide breaks down which states charge the most and least, why the gap is so wide, and what actually determines your property tax bill beyond just the state you live in. Whether you're house hunting, relocating, or just curious how your state stacks up, you'll find clear numbers and context here — not just a ranking.
What Is Property Tax, Exactly?
Property tax is a recurring tax levied on real estate, calculated as a percentage of the property's assessed value. Unlike income tax, which is collected at the federal and often state level, property tax is primarily a local tax — collected by counties, cities, and school districts to fund public services.
The rate you actually pay is usually described as the "effective property tax rate," which is calculated by dividing the median property tax paid by the median home value in that area. This is different from a property's assessed value, which is the value a local assessor assigns for tax purposes and may not exactly match current market value.
Property taxes primarily fund:
- Public schools (often the single largest share)
- Local police and fire departments
- Road maintenance and infrastructure
- Libraries, parks, and other community services
Which States Have the Highest Property Tax Rates?
Based on the most recent data available for 2026, these states consistently rank at the top for effective property tax rates:
Rank: 1
State: New Jersey
Effective Property Tax Rate: ~2.11%–2.23%
Approx. Annual Tax on Median Home: ~$8,900–$9,600
Rank: 2
State: Illinois
Effective Property Tax Rate: ~2.01%–2.07%
Approx. Annual Tax on Median Home: ~$7,000–$7,700
Rank: 3
State: Connecticut
Effective Property Tax Rate: ~1.81%–1.92%
Approx. Annual Tax on Median Home: ~$6,500–$7,200
Rank: 4
State: New Hampshire
Effective Property Tax Rate: ~1.66%–1.89%
Approx. Annual Tax on Median Home: ~$6,000–$6,800
Rank: 5
State: Vermont
Effective Property Tax Rate: ~1.83%
Approx. Annual Tax on Median Home: ~$5,900–$6,400
New Jersey's rate isn't just the highest percentage — it's compounded by home values that already run well above the national median, which pushes the actual dollar amount homeowners pay to some of the highest in the country. Illinois and Connecticut follow a similar pattern: heavy reliance on property taxes to fund local schools and services keeps rates elevated even where home values are more moderate.
Which States Have the Lowest Property Tax Rates?
At the other end of the spectrum, these states offer homeowners the lightest property tax burden relative to home value:
Here's that table in blockquote form:
Rank: 1
State: Hawaii
Effective Property Tax Rate: ~0.27%–0.29%
Approx. Annual Tax on Median Home: ~$900–$2,000
Rank: 2
State: Alabama
Effective Property Tax Rate: ~0.38%
Approx. Annual Tax on Median Home: ~$1,250
Rank: 3
State: Nevada
Effective Property Tax Rate: ~0.47%
Approx. Annual Tax on Median Home: ~$1,550
Rank: 3
State: Delaware
Effective Property Tax Rate: ~0.47%
Approx. Annual Tax on Median Home: ~$1,750
Rank: 4
State: Colorado / Arizona / South Carolina
Effective Property Tax Rate: ~0.48%–0.49%
Approx. Annual Tax on Median Home: ~$1,600
Hawaii's low rate is a bit of a special case: even though the percentage is the lowest in the nation, the state's median home value is also the highest in the country, so the actual dollar amount homeowners pay isn't necessarily the lowest — it just reflects a low rate applied to a high-value home.
Note: Effective property tax rates shift slightly year to year and vary by data source (Tax Foundation, WalletHub, U.S. Census Bureau). Figures above reflect 2026 estimates and are best treated as close approximations rather than exact current-year numbers — always confirm the latest figures for your specific state and county.
Why Do Property Tax Rates Vary So Much Between States?
A few consistent factors explain the wide gap between high-tax and low-tax states:
Reliance on property tax for school funding. States like New Jersey and Illinois fund a large share of public education through local property taxes rather than state-level income or sales tax revenue, which pushes local rates up significantly.
State income tax tradeoffs. States without an income tax — like Texas, New Hampshire, and Florida — often lean more heavily on property and sales taxes to make up the difference. Texas and New Hampshire both rank among the higher property tax states for this reason, while Florida and Nevada manage to stay moderate to low despite having no income tax.
Home values vs. tax rates. A high percentage rate on a lower-value home can result in a smaller total bill than a low percentage rate on a very expensive home — which is exactly the dynamic behind Hawaii's ranking.
Local and county-level variation. State averages can mask significant swings at the county level. Two homes of identical value in different counties within the same state can carry noticeably different property tax bills depending on local school funding needs and municipal budgets.
Do States With No Income Tax Have Higher Property Taxes?
Often, yes — though not universally. States without an individual income tax need to fund public services somehow, and property tax is one of the primary levers available. Texas and New Hampshire, both no-income-tax states, rank among the higher property tax states in the country. Florida and Nevada, however, manage to keep property taxes moderate to low despite also having no income tax, largely due to strong tourism and sales tax revenue offsetting the gap.
If you're weighing where to live or base a business partly around overall tax exposure, it's worth looking at the full picture rather than property tax in isolation — this breakdown of federal tax vs. state tax explains how the different layers interact, and this guide on choosing the best state for LLC tax savings is useful if business tax exposure is part of your decision.
How Is Property Tax Actually Calculated?
Your property tax bill generally comes down to two numbers multiplied together:
- Assessed value — the value a local assessor assigns to your property, which may be based on recent sale prices, market comparisons, or a percentage of market value depending on the jurisdiction.
- Local tax rate (often called a mill rate) — the rate set by your county, city, and school district combined, usually expressed as a percentage or as dollars per $1,000 of assessed value.
Multiplying these together gives your annual property tax bill. Because both the assessed value and the local rate can change from year to year — especially after reassessments — property tax bills often rise even when a homeowner hasn't changed anything about their property.
Property Tax Exemptions and Relief Programs
Most states offer some form of property tax relief, which can meaningfully reduce what a homeowner actually pays compared to the sticker-rate percentage:
- Homestead exemptions — reduce the taxable value of a primary residence in many states
- Senior exemptions — additional reductions or rate freezes for homeowners over a certain age
- Veteran exemptions — property tax relief for qualifying veterans, and in some states, full exemptions for disabled veterans
- Income-based relief programs — some states offer rebates or credits tied to household income, regardless of age
These programs vary significantly by state and even by county, so the "effective rate" quoted in state rankings doesn't always reflect what an eligible homeowner actually ends up paying after relief programs are applied.
Can You Deduct Property Taxes on Your Federal Return?
Yes, property taxes are generally deductible on a federal return if you itemize deductions, though they fall under the State and Local Tax (SALT) deduction, which is subject to a capped limit. This means high-property-tax states don't get unlimited federal relief for their higher local bills — the deduction only goes so far, which is part of why the property tax burden in states like New Jersey and Illinois still feels significant even after accounting for federal tax benefits.
What This Means If You're Relocating or Buying a Home
Property tax rates are worth factoring into any relocation or home-buying decision alongside other costs like home prices, income tax, and general cost of living. A few practical takeaways:
- Don't compare rates alone — compare actual dollar amounts. A lower percentage rate on a much more expensive home can still mean a bigger annual bill.
- Check county-level rates, not just state averages. Property tax can vary substantially within the same state.
- Factor in available exemptions, especially if you're a senior, veteran, or otherwise eligible for local relief programs.
- Consider the full tax picture, not property tax in isolation — a state with low property tax but high income tax may not save you money overall.
Frequently Asked Questions
Which state has the highest property tax rate? New Jersey currently has the highest effective property tax rate in the country, at approximately 2.1% to 2.2% of home value, followed by Illinois and Connecticut.
Which state has the lowest property tax rate? Hawaii has the lowest effective property tax rate, at roughly 0.27% to 0.29%, followed by Alabama and Nevada.
What is the average property tax rate in the US? The national average effective property tax rate is approximately 0.99% of home value, though this varies significantly by state and county.
Do states with no income tax have higher property taxes? Often, yes — states like Texas and New Hampshire lean more heavily on property tax in the absence of income tax, though states like Florida and Nevada manage to keep property taxes moderate despite also having no income tax.
How is property tax calculated? Property tax is calculated by multiplying a property's assessed value by the local tax rate, which is typically set by a combination of county, city, and school district budgets.
Are property taxes the same across every county in a state? No. State-level figures are averages — actual property tax rates can vary significantly between counties and even municipalities within the same state, depending on local school funding needs and services.
The Bottom Line
Property tax rates vary dramatically across the US, from under 0.3% in Hawaii to over 2% in New Jersey — a difference that can mean thousands of dollars a year on a similarly priced home. The gap comes down to how heavily each state relies on property tax to fund schools and local services, along with the tradeoff many no-income-tax states make by leaning more on property and sales tax instead.
If you're planning a move, buying a home, or weighing where to base a business, property tax is just one piece of a larger tax picture. For a fuller comparison of how state-level taxes stack up against federal obligations, this guide on federal tax vs. state tax is a helpful next read, and Brandora Services covers more state-by-state tax planning topics on the blog if you're weighing a relocation or business decision that depends on the full tax landscape.
Sources: Tax Foundation, U.S. Census Bureau (American Community Survey) — taxfoundation.org