How does property tax affect my monthly housing costs?

Property tax is typically escrowed into your mortgage payment, so it directly affects your monthly housing cost. On a $400,000 home, the difference between New Jersey's 2.21% rate and Hawaii's 0.27% rate is roughly $645 per month. Over a 30-year mortgage, that's approximately $232,000 in additional cost. For mortgage qualification purposes, property tax counts toward your debt-to-income ratio.

Note: Effective property tax rates change with home values and local millages. Data approximate as of early 2026 from public sources. Informational only — not tax advice.

Taxes·15 min read·April 14, 2026

States with the Lowest Property Taxes 2026

Q: Which state has the lowest property tax?

Hawaii has the lowest effective property tax rate in the United States at approximately 0.27% of assessed value, though Hawaii's high home prices mean total dollar amounts paid can still be significant. Other states with very low effective rates include Alabama (~0.39%), Colorado (~0.49%), Nevada (~0.55%) and Louisiana (~0.55%). 'Effective rate' is the percentage of a home's market value paid in annual property tax.

Q: Which states have the highest property taxes?

New Jersey has the highest effective property tax rate at approximately 2.21%, followed by Illinois (~2.05%), New Hampshire (~1.93%), Vermont (~1.83%), Connecticut (~1.79%) and Texas (~1.68%). On a $400,000 home, that translates to $7,200 to $8,800 in annual property tax — meaningfully higher than the $1,000–$2,000 owners pay in the lowest-tax states.

Q: Are no income tax states good for property tax?

Mixed. Some no-income-tax states have very low property tax (Wyoming ~0.55%, Florida ~0.86%, Tennessee ~0.67%, Nevada ~0.55%). Others compensate for missing income tax revenue with higher property taxes (Texas ~1.68%, New Hampshire ~1.93%). The best total tax burden picks combine no income tax with low property tax: Wyoming, Tennessee, Nevada and Florida all qualify.

Q: Can property tax rates change?

Yes. Effective rates change as home values change relative to assessed values, and millage rates change with local government decisions. Some states have caps on annual increases (California's Prop 13 limits to 2% per year, Florida's Save Our Homes limits homestead increases to 3%). Most states reassess every 1–4 years, so a hot market can drive rates higher even without a millage change.

Property tax is one of the most overlooked variables in housing cost. The effective rate ranges from 0.27% in Hawaii to 2.21% in New Jersey — an 8x difference. On a $400,000 home, that's a $7,750/year gap. This guide ranks all 50 states and breaks down the dollar impact by home price.

Quick Summary

Lowest: Hawaii (0.27%), Alabama (0.39%), Colorado (0.49%), Nevada (0.55%), Louisiana (0.55%), DC (0.55%), Wyoming (0.55%). Highest: New Jersey (2.21%), Illinois (2.05%), New Hampshire (1.93%), Vermont (1.83%), Connecticut (1.79%), Texas (1.68%). The trade-off: many low property tax states are coastal (Hawaii) or have lower home values (Alabama, Louisiana). The best total picks combine low property tax with no income tax: Wyoming, Tennessee, Nevada, Florida.

Lowest Rate

Hawaii 0.27%

On home value

Highest Rate

NJ 2.21%

Highest in U.S.

National Median

~1.02%

50-state median

$400K Home Range

$1,080–$8,840

Annual property tax

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Top 10 Lowest Property Tax States

Effective rate = annual property tax / market value. Approximate for early 2026.
Rank	State	Effective Rate	Tax on $400K Home	Notes
1	Hawaii	0.27%	$1,080	Low rate but high home values
2	Alabama	0.39%	$1,560	Strong total tax-friendliness
3	Colorado	0.49%	$1,960	Moderate income tax (4.4%)
4	Louisiana	0.55%	$2,200	Strong homestead exemption
5	Nevada	0.55%	$2,200	Combined with no income tax
6	DC	0.55%	$2,200	But high income tax
7	Wyoming	0.55%	$2,200	No income tax + low property
8	Utah	0.58%	$2,320	Flat 4.65% income tax
9	South Carolina	0.56%	$2,240	Strong homestead deduction
10	West Virginia	0.59%	$2,360	Among lowest costs

Top 10 Highest Property Tax States

Effective rates approximate for early 2026.
Rank	State	Effective Rate	Tax on $400K Home	Notes
1	New Jersey	2.21%	$8,840	Highest in U.S.
2	Illinois	2.05%	$8,200	Local cook county high
3	New Hampshire	1.93%	$7,720	No income tax, high property
4	Vermont	1.83%	$7,320	High overall tax burden
5	Connecticut	1.79%	$7,160	Plus high state income tax
6	Texas	1.68%	$6,720	No income tax offset
7	New York	1.64%	$6,560	Plus very high income tax
8	Wisconsin	1.63%	$6,520	Mid progressive income tax
9	Nebraska	1.61%	$6,440	Plus moderate income tax
10	Pennsylvania	1.49%	$5,960	Low flat income tax

Effective vs Nominal Rate

Effective rate is the actual percentage of your home's market value you pay in property tax annually. Nominal rate (or millage) is the local government's stated rate, which applies to the assessed value — often a fraction of market value. The effective rate captures the real out-of-pocket cost regardless of how the local jurisdiction defines its math, which makes it the right number for state-to-state comparisons.

Total Tax Burden: The Real Picture

Low property tax alone does not mean low total tax. Some no-income-tax states (TX, NH) compensate with high property tax. The best total tax burden picks combine reasonable property tax with low income and sales taxes:

Comparison of states with no income tax.
State	Property Tax	Income Tax	Sales Tax	Total Picture
Wyoming	0.55%	0%	5.5% combined	Lowest total tax burden in U.S.
Tennessee	0.67%	0%	9.55% combined	High sales tax offsets some
Nevada	0.55%	0%	8.38% combined	Strong all-around
Florida	0.86%	0%	7.02% combined	Insurance offsets some
Texas	1.68%	0%	8.20% combined	High property tax tradeoff

For deeper analysis, see our states with the lowest total taxes ranking and no income tax states guide.

See the Full Tax Impact

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Frequently Asked Questions

Which state has the lowest property tax?

Hawaii has the lowest effective property tax rate at approximately 0.27%, though Hawaii's high home prices mean total dollar amounts can still be significant. Other low-rate states: Alabama (0.39%), Colorado (0.49%), Nevada (0.55%), Louisiana (0.55%).

Which states have the highest property taxes?

New Jersey leads at ~2.21%, followed by Illinois (2.05%), New Hampshire (1.93%), Vermont (1.83%), Connecticut (1.79%) and Texas (1.68%). On a $400,000 home, the gap between Hawaii and New Jersey is roughly $7,750/year.

Are no income tax states good for property tax?

Mixed. Some combine no income tax with low property tax (Wyoming, Tennessee, Nevada, Florida). Others compensate with high property tax (Texas, New Hampshire). The best total picks combine both low rates: Wyoming, Tennessee, Nevada, Florida.

How does property tax affect monthly housing costs?

Property tax is typically escrowed into your mortgage payment, directly affecting your monthly housing cost. On a $400,000 home, the difference between NJ (2.21%) and Hawaii (0.27%) is roughly $645/month. Over a 30-year mortgage, that's about $232,000 in additional cost.

Can property tax rates change?

Yes. Effective rates change as home values shift and local millages adjust. Some states cap annual increases (California's Prop 13 limits to 2%, Florida's Save Our Homes to 3%). Most states reassess every 1–4 years, so a hot market can drive rates higher.

⚠️ Important: We do NOT collect or store any data you enter. All calculations happen 100% in your browser. Tax calculations use 2026 IRS tax tables (IRS Publication 15-T) and current state tax rates. Cost of living estimates are based on 2026 average market data. This is a free educational tool to help you understand your finances—it is NOT a financial service. Results are for illustrative purposes only and do not constitute professional tax, financial, or legal advice. If you notice any discrepancies, please contact us so we can improve. Consult a qualified CPA or financial advisor for personalized guidance.

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