Real Estate Investing
Property Taxes By State 2022: Ranked Lowest to Highest
Belong on Aug 11, 2022
Everyone pays property taxes. Yes, we’re talking to you too, renters! Though homeowners and investors are probably the first to investigate states with the lowest property taxes, landowners often pass property taxes onto their tenants. That means everyone should get curious about property taxes.
But a lower property tax rate isn’t necessarily better. Property taxes help fund critical government programs–think schools and police departments, for starters–which is why communities can’t just do away with property taxes. How much a property owner will actually pay in property taxes also has as much to do with the property tax rate as it does with that property’s value.
Whether you’re considering investing in a new rental or want to better understand the annual costs of your existing real estate, it’s important to know what property taxes are based on and the tax rate you might pay in your state (and whether your property is in one of the states with the lowest property taxes!).
What are property taxes based on?
Property taxes are based on the assessed value of your home. Though the assessor doesn’t set the tax rate, their assessment of your home value is a key piece of the property tax equation. Whether your municipality uses a mill levy (where 1 mill = $1 of property tax for every $1,000 of assessed value) or a property tax rate, your annual property tax payment ultimately reflects a percentage of the value of your home.
If your home is valued at $100,000, and the property tax rate is 0.281% (assuming you’re lucky enough to live in Hawaii), you would owe $281 in property taxes every year. That’s why, when it comes to investing, the property tax rate is equally as important as the home’s assessed value. Even if the state has a low average property tax rate, you may still pay more per year in property taxes if home values are higher than you would in a state with a higher tax rate but lower average home values.
To make the right decision for you, consider the 2022 property tax rates by state, starting with the states with the lowest property taxes.
What states have the lowest property taxes 2022?
The state with the lowest property tax rate is Hawaii, giving investors even more reason to consider the Aloha State. Though their effective property tax rate is a low 0.28%, there are actually several states with property taxes under 1%. Many of these are Southern states, but Colorado also made the cut at 0.505%.
The five states with the lowest property taxes are:
Average Effective Property Tax Rate: 0.281%
Median Home Value: $615,300
Annual Taxes On a Median-Priced Home: $1,715
Average Effective Property Tax Rate: 0.406%
Median Home Value: $142,700
Annual Taxes On a Median-Priced Home: $587
Average Effective Property Tax Rate: 0.505%
Median Home Value: $343,300
Annual Taxes On a Median-Priced Home: $1,756
Average Effective Property Tax Rate: 0.551%
Median Home Value: $163,100
Annual Taxes On a Median-Priced Home: $890
5. South Carolina
Average Effective Property Tax Rate: 0.566%
Median Home Value: $162,300
Annual Taxes On a Median-Priced Home: $924
Though a low average effective property tax rate may sound ideal, it’s not the only property tax figure that counts. The actual amount a homeowner will pay has everything to do with that home’s value. Homeowners in Alabama, for example, may pay less per year in property taxes than Hawaiian homeowners, for example, because most home values in Alabama are lower than those in Hawaii.
Investors need to consider not only the property tax rate, but what that means for their specific property.
What states have the highest property taxes 2022?
The state with the highest property tax rate is New Jersey. Homeowners in New Jersey may pay more than $8,000 per year in property taxes, depending on the value of their home. Though this may sound steep, the next highest states aren’t far behind, with average effective property tax rates near or above 2%.
These states include:
1. New Jersey
Average Effective Property Tax Rate: 2.49%
Median Home Value: $335,600
Annual Taxes On a Median-Priced Home: $8,362
Average Effective Property Tax Rate: 2.27%
Median Home Value: $194,500
Annual Taxes On a Median-Priced Home: $4,419
3. New Hampshire
Average Effective Property Tax Rate: 2.18%
Median Home Value: $261,700
Annual Taxes On a Median-Priced Home: $5,701
Average Effective Property Tax Rate: 2.14%
Median Home Value: $275,400
Annual Taxes On a Median-Priced Home: $5,898
Average Effective Property Tax Rate: 1.90%
Median Home Value: $227,700
Annual Taxes On a Median-Priced Home: $4,329
What states have no property taxes 2022?
States with no property taxes may sound like a dream–but that’s because, unfortunately, it is one. There is no state in the U.S. that has no property taxes, largely because states actually need taxes to fund critical initiatives.
Property taxes help fund schools, fire and police departments, water districts, and libraries, all of which makes states and their citizens need for public health and safety.
U.S. States ranked by 2022 property taxes
Ranked from lowest to highest, these are the average property tax rates in the U.S. in 2022:
- Hawaii - 0.28%
- Alabama - 0.41%
- Colorado - 0.51%
- Louisiana - 0.55%
- South Carolina - 0.57%
- Delaware - 0.57%
- West Virginia - 0.58%
- Nevada - 0.60%
- Wyoming - 0.61%
- Arkansas - 0.62%
- Utah - 0.63%
- Arizona - 0.66%
- Idaho - 0.69%
- Tennessee - 0.71%
- California - 0.76%
- New Mexico - 0.80%
- Mississippi - .81%
- Virginia - 0.82%
- Montana - 0.84%
- North Carolina - 0.84%
- Indiana - 0.85%
- Kentucky - 0.86%
- Florida - 0.89%
- Oklahoma - 0.90%
- Georgia - 0.92%
- Missouri - 0.97%
- Oregon - 0.97%
- North Dakota - 0.98%
- Washington - 0.98%
- Maryland - 1.09%
- Minnesota - 1.12%
- Alaska - 1.19%
- Massachusetts - 1.23%
- South Dakota - 1.31%
- Maine - 1.36%
- Kansas - 1.41%
- Michigan - 1.54%
- Ohio - 1.56%
- Iowa - 1.57%
- Pennsylvania - 1.58%
- Rhode Island - 1.63%
- New York - 1.72%
- Nebraska - 1.73%
- Texas - 1.80%
- Wisconsin - 1.85%
- Vermont - 1.90%
- Connecticut - 2.14%
- New Hampshire - 2.18%
- Illinois - 2.27%
- New Jersey - 2.49%
How property owners can tackle taxes
Between assessed values, mill levies, and property tax rates, taxes on rental properties can get complicated. Though you could wait for your county treasurer to send you a property tax bill, it’s better to understand your local tax code so there are no surprises come tax season.
Belong homeowners have complete visibility into their property’s income and expenses, all through the Belong app. The app handles all the math for you, and even compiles a year-end report that you or your accountant can use to assist with your filings. Our concierge is also always on-hand should you have questions about property taxes or any other costs affecting your property.