The lowest property tax states in 2026 are Hawaii (0.27% effective rate), Alabama (0.38%), Idaho and Arizona (both 0.43%), South Carolina and Tennessee (both 0.45%), followed by Nevada, Delaware, Utah and Colorado. On a $400,000 home, those rates work out to roughly $1,100 to $2,000 a year in property tax, against about $3,560 at the national rate of 0.89% and more than $7,500 in New Jersey or Illinois.
This ranking of the lowest property tax states comes from our own calculation using the US Census Bureau's 2024 American Community Survey (ACS) 1-year estimates, the most recent single-year release at the time of writing. The Census Bureau has scheduled the 2025 ACS 1-year estimates for public release on October 29, 2026, and this ranking will be refreshed once those tables are available. For each state we divided the median real estate taxes paid by owner-occupied households by the median value of owner-occupied homes. The result is an effective rate, which is the share of a home's market value that a typical owner actually pays each year after local rates, assessment ratios and exemptions have all done their work.
Nominal tax rates (mills, levies, assessment ratios) are hard to compare across states because each state builds its bill differently. Alabama assesses a home at 10% of value and then applies mills. South Carolina assesses a legal residence at 4%. An effective rate cuts through those differences.
The formula is simple:
Effective rate = median real estate taxes paid ÷ median home value
Both inputs come from the same survey and the same households. Median taxes paid come from ACS table B25103, which reports median real estate taxes paid for owner-occupied housing units. Median home value comes from ACS table B25077, which reports the median value of owner-occupied housing units. The national figures are $3,211 in taxes and $360,600 in value, which gives 0.89%.
A ratio of two medians is an approximation, and ACS home values are owner estimates that can differ from assessor values. The method still compares every state on the same footing.
The table below lists the 10 states with the lowest effective property tax rates, plus the national figure and the two highest-rate states for contrast. Washington, DC (0.63%) and Puerto Rico (0.44%) appear in the Census data but are not states, so they are excluded from the ranking.
| Rank | State | Median taxes paid | Median home value | Effective rate | Tax on a $400,000 home |
|---|---|---|---|---|---|
| 1 | Hawaii | $2,385 | $875,900 | 0.27% | $1,089 |
| 2 | Alabama | $890 | $233,300 | 0.38% | $1,526 |
| 3 | Idaho | $1,912 | $446,400 | 0.43% | $1,713 |
| 4 | Arizona | $1,828 | $426,000 | 0.43% | $1,716 |
| 5 | South Carolina | $1,337 | $299,500 | 0.45% | $1,786 |
| 6 | Tennessee | $1,488 | $332,600 | 0.45% | $1,790 |
| 7 | Nevada | $2,143 | $455,500 | 0.47% | $1,882 |
| 8 | Delaware | $1,750 | $371,600 | 0.47% | $1,884 |
| 9 | Utah | $2,648 | $545,200 | 0.49% | $1,943 |
| 10 | Colorado | $2,828 | $574,600 | 0.49% | $1,969 |
| United States | $3,211 | $360,600 | 0.89% | $3,562 | |
| 49 | New Jersey | $9,358 | $496,000 | 1.89% | $7,547 |
| 50 | Illinois | $5,399 | $280,700 | 1.92% | $7,694 |
Source: US Census Bureau, ACS 2024 1-year estimates, tables B25103 and B25077; effective rate and $400,000 figures calculated by Madras Accountancy. Dollar figures use the unrounded rate.
Rates are close together in the middle of the list. Idaho and Arizona are separated by $3 on a $400,000 home, and Utah and Colorado are separated by $26. Treat ranks 3 through 10 as one band of very low-tax states.
Hawaii has the highest median home value in the top 10 and still the lowest rate, so a typical Hawaii owner pays more in dollars ($2,385) than a typical owner in Alabama, South Carolina or Tennessee. At the other end, our guide to Illinois real estate tax deadlines and installments covers how bills there are paid.
A state's average rate tells you what a typical owner pays. Your own bill depends on whether you claim the local homestead exemption and whether an assessment cap limits increases. Every program below requires the home to be your primary residence, and most require an application. The details were checked on each state's or county's official site in October 2026.
Hawaii's property tax is set by each county, so the exemption depends on the island. On Oahu, the City and County of Honolulu's home exemption reduces the assessed value by $120,000, or $160,000 if the owner is 65 or older. The city has scheduled an increase to $140,000 and $180,000 effective July 1, 2027. Claims filed by September 30 and approved take effect for the following tax year, and the exemption applies only to property the owner occupies as a primary home. Investors buying on Oahu should note that a rental does not get this exemption; our Hawaii rental property bookkeeping guide covers the record-keeping side.
Alabama assesses single-family owner-occupied homes at 10% of appraised value (Class III). On top of that, the Alabama Department of Revenue homestead exemption for owners under 65 who are not disabled removes $4,000 of assessed value from state-levied tax and $2,000 from county tax. Owners 65 and older are exempt from state-levied tax with no maximum amount, and county exemptions depend on age and income. You apply at your local county office.
Idaho's homeowner's exemption removes 50% of the value of your home and up to one acre of land from property tax, with a maximum of $125,000. You apply with your county assessor. Under House Bill 843, effective January 1, 2026, the exemption is no longer prorated by filing date, and an application filed before the close of business on the last business day of the year can qualify for the full exemption, according to the Idaho State Tax Commission's guidance. Above a $250,000 home value, the $125,000 maximum binds.
Arizona works through constitutional limits. Article 9, Section 18 of the Arizona Constitution caps primary taxes on residential property at 1% of the property's full cash value as limited by that section, and since tax year 2015 it has limited the taxable value to the lesser of full cash value or 5% more than the prior year's value. Taxes levied to repay bonded debt sit outside the 1% limit. Residents 65 and older who meet an income test can apply for a property valuation protection option that freezes the value of their primary residence.
South Carolina taxes a legal residence at a 4% assessment ratio, while other real property not otherwise classified is assessed at 6% under S.C. Code § 12-43-220. The South Carolina Department of Revenue also describes a homestead exemption that fully exempts the first $50,000 of fair market value of the legal residence for homeowners over 65, totally and permanently disabled, or legally blind. You apply for the 4% ratio with the county assessor and for the homestead exemption with the county auditor. The department also notes a temporary additional homestead amount for tax year 2026, which the county auditor applies to eligible accounts.
Tennessee's Comptroller describes two property tax programs: property tax relief for low-income elderly and disabled homeowners and for disabled veterans or their surviving spouses, and a property tax freeze that locks qualifying homeowners' taxes on their principal residence at the amount owed in the year they first qualify. The freeze applies only in counties and cities that have adopted it, so check with the local trustee.
Nevada caps the growth of the tax bill itself. Clark County's assessor explains that NRS 361.4723 provides a partial abatement that applies a 3% cap on the tax bill of the owner's primary residence, while residences that are not owner occupied get a cap of up to 8%. The cap matters most in fast-appreciating markets.
If you think the assessed value itself is wrong, the steps in our guide to challenging a property tax assessment apply in every state.
This example is illustrative and uses the ACS effective rates from the table above.
Step 1: Typical annual bill at each state's effective rate. Multiply $400,000 by each rate:
The gap between Illinois and Hawaii on the same home is $6,604 a year. Over a 10-year hold, that is more than $66,000 before any rate changes.
Step 2: How exemptions change the taxable base. Each state applies its own rules before the local levy:
The local levy is then applied to those figures, and levies vary by county, city and school district. Request the actual tax bill or the assessor's record for any property you are considering.
Step 3: Monthly budget effect. If you escrow taxes with your mortgage, the Step 1 monthly figures are added to your payment. Landlords should model this line explicitly in a rental property cash flow analysis.
Low property tax rarely means low total tax. States still need revenue for schools, roads and public safety, and the lowest property tax states tend to collect more through sales, excise or income taxes.
Sales and excise taxes. Alabama combines very low property tax with state and local sales taxes that stack by county and city; our Alabama sales tax guide covers the current rates. Nevada's combined state and local sales tax rates are covered in our Nevada sales tax guide. A household that spends heavily on taxable purchases can give back much of its property tax savings at the register.
Income taxes. Check the income tax rules in any state you are considering. For a high earner, a few points of state income tax can outweigh a $2,000 difference in property tax. Business owners with pass-through income can sometimes reduce the federal cost of state income tax through an elective entity-level tax; see how the pass-through entity tax works.
Federal deduction (SALT). Property tax is deductible on your federal return only if you itemize, and it shares a cap with state income or sales tax. Under the One Big Beautiful Bill Act amendments to 26 U.S.C. § 164, the cap is $40,000 for 2025 and $40,400 for 2026. It is reduced by 30% of modified adjusted gross income above $500,000 for 2025 and $505,000 for 2026, though never below $10,000, and it returns to $10,000 for tax years after 2029. In the lowest property tax states, a $1,000 to $2,000 bill leaves more room under the cap for state income tax. Other homeowner deductions changed for 2026 too, including the mortgage insurance premium deduction.
Taxes at sale and death. If you are relocating for retirement, our guides to capital gains tax on real estate and the states with no estate or inheritance tax cover those costs.
State averages are a starting point. Before you commit to a purchase, check these items for the specific property:
States outside the top 10 can still be reasonable choices. Florida (0.75%) sits near the middle of the ranking, and its payment calendar is set out in our Florida property tax deadlines guide. Texas (1.31%) ranks 43rd among the states; how the Texas property tax system works explains why.
Which state has the lowest property tax in 2026? Hawaii has the lowest effective property tax rate, at about 0.27% of home value, based on 2024 ACS data. Alabama is second at about 0.38%. In median dollars paid, West Virginia ($881) and Alabama ($890) are the lowest.
Which state has the highest property tax rate? Illinois has the highest effective rate in the 2024 ACS data at about 1.92%, followed closely by New Jersey at about 1.89%. New Jersey has the highest median bill in dollars at $9,358.
Why does my state rank differ from other lists? Rankings depend on the data year and method. This list divides median taxes paid by median home value from the 2024 ACS 1-year estimates. Lists built from 5-year ACS data, from older years, or from aggregate tax collections will place states in a slightly different order, especially in the tightly bunched middle of the top 10.
Do I have to apply for a homestead exemption? In most states, yes. Honolulu, Idaho, South Carolina and Alabama all require the owner to apply locally, and in Honolulu a claim filed by September 30 takes effect only for the following tax year. Check your county assessor's site soon after closing.
Is property tax deductible on my federal return in 2026? Yes, if you itemize. It counts toward the state and local tax cap, which is $40,400 for 2026 and phases down to as low as $10,000 for modified adjusted gross income above $505,000.
Does moving to a low property tax state always lower my total tax bill? No. Higher sales, excise or income taxes can offset the savings, depending on your income and spending. Compare your expected total state and local tax in both locations before deciding.
Madras Accountancy helps homeowners, landlords and business owners plan for the tax side of a move or a property purchase, with bookkeeping, tax preparation and CFO-level advisory support. To talk through your numbers, contact our team.
The section 4960 excise tax is 21% of nonprofit pay over $1M. From 2026 it covers all employees. See the medical carve-outs, Form 4720 and a worked example.
The paid family and medical leave tax credit is permanent from 2026. See the 12.5% to 25% rates, the premium option, the 6-month rule and how Form 8994 works.
Opportunity zones become permanent in 2027 under the One Big Beautiful Bill. See the new deferral, rural bonus, and the 2026 handoff.
