Learn which states cost the least and what it means for property owners in 2025
Property taxes are paid by those who own land or other real estate in a locality, and the rate of taxation varies depending on where you live. Payments can range from a few hundred dollars a year to the equivalent of a second mortgage. In 2023, the average annual property tax bill in the United States was $4,062, according to numbers collected by real estate data firm ATTOM. This was a 4.1% increase from 2022, following a 3% increase from 2021.
Property taxes are a vital source of funding for local governments. They are used to pay for roads, buses, schools, parks, rec centers, libraries, firefighters, police, and many other local public works. But how well these things are funded depends on where you live. In 2023, states in the South and West of the United States had the lowest effective property tax rates, while the highest were found in the Midwest and Northeast.
Where to Find the Lowest Property Tax Rates
Most property taxes are levied by local (city, school districts, and counties) rather than state governments. While higher property taxes do make homeownership more expensive, they also generally go along with better funding for local services. Because these taxes are raised and spent locally, homeowners can generally see exactly what their taxes are funding.
However, if you’re interested in buying a larger-than-average house or owning a significant piece of land, you may be looking for the states with the lowest effective property tax.
Where the Data Come From
- Effective property tax rates: 2023 rates as compiled by ATTOM
- Typical home values: Values as of January 2025 from Zillow’s Home Value Index (ZHVI)
1. Hawaii: 0.31%
- Effective Property Tax Rate: 0.31%
- Typical Home Value: $831,305.17
- Annual Property Taxes Based on Typical Home Value: $2,577.05
In 2023, the effective property tax rate in Hawaii was the lowest in the United States. However, the state’s median home price was the highest in the nation in January 2025. As a result, even with a low effective tax rate, the actual property tax bill homeowners owe can still be significant.
2. Arizona: 0.41%
- Effective Property Tax Rate: 0.41%
- Typical Home Value: $424,841.80
- Annual Property Taxes Based on Typical Home Value: $1,741.85
The property tax rate in Arizona is one of the lowest in the country. However, the typical home value in Arizona is higher than the median cost of a home in the U.S., which was $355,328 in January 2025. As a result, many homeowners could still have larger property tax bills than those in states with a higher effective rate.
3. Alabama: 0.42%
- Effective Property Tax Rate: 0.42%
- Typical Home Value: $224,910.79
- Annual Property Taxes Based on Typical Home Value: $944.63
Alabama’s effective property tax rate might be higher than that of Hawaii and Arizona, but its typical home value is significantly lower. As a result, the average homeowner’s actual property tax bill is also much lower.
4. Delaware: 0.43%
- Effective Property Tax Rate: 0.43%
- Typical Home Value: $380,840.16
- Annual Property Taxes Based on Typical Home Value: $1,637.61
The typical home value in Delaware is close to the national average. As a result, the total property tax bill that an average homeowner would pay in Delaware is right in the middle of this list. In addition to low property tax rates, Delaware also has no state sales tax
5. Tennessee: 0.44%
- Effective Property Tax Rate: 0.44%
- Typical Home Value: $318,456.50
- Annual Property Taxes Based on Typical Home Value: $1,401.21
Tennessee is an affordable state to live in, with a cost of living that is the 11th lowest in the U.S. With a low property tax rate and home values below the national average, homeowners’ property tax bills are also relatively low compared to those in other states, even those with lower effective property tax rates. However, like Alabama, Tennessee also has a relatively high poverty rate of 14%, which is higher than the U.S. median poverty rate of 12.5%.
The Bottom Line
Property taxes are assessed primarily by local governments and used to fund public works such as roads, schools, police, firefighters, and parks. These taxes are calculated as a percentage of a property’s assessed value.
In some areas, homeowners who meet certain criteria can qualify for property tax exemptions. These may be offered by the local jurisdiction, as well as by the state or county. One example is the homestead exemption, which limits property tax to being levied only on a portion of your property value if you meet certain income or age requirements. Other exemptions may be offered to veterans, homeowners with disabilities, or those who make certain renovations.
These exemptions are not automatically applied and must be claimed by the homeowners.
