States with the Lowest Property Taxes
Published: 2026-07-12 | Updated: 2026-07-12
Disclaimer: This article provides general educational information based on publicly available data. Property tax rules vary by state, county, and city. Confirm figures with your local tax assessor's office and a qualified tax professional before making decisions.
Low property taxes are a major draw for retirees, remote workers, and anyone watching their monthly carrying costs. The lightest-tax states can cost less than $1,200 a year on a $400,000 home — a difference of several thousand dollars annually versus the highest-tax states. But "low rate" is not the same as "low total cost," and understanding the distinction prevents expensive surprises when you actually move.
Here are the ten states with the lowest effective property tax rates (Tax Foundation 2024), with context on why they stay low and what trade-offs accompany the savings. The pattern is clear: low property tax usually means the state raises money elsewhere, or constrains local government through constitutional limits.
The 10 Lowest-Tax States (2024 Effective Rates)
| State | Effective Rate | Annual Tax on $400k Home |
|---|---|---|
| Hawaii | 0.29% | $1,160 |
| Alabama | 0.37% | $1,480 |
| Louisiana | 0.55% | $2,200 |
| Wyoming | 0.53% | $2,120 |
| Delaware | 0.54% | $2,160 |
| Colorado | 0.50% | $2,000 |
| Nevada | 0.50% | $2,000 |
| South Carolina | 0.49% | $1,960 |
| Arizona | 0.48% | $1,920 |
| Utah | 0.48% | $1,920 |
Note that several of these states cluster tightly between 0.48% and 0.55%, showing a regional bloc of light taxation across the South and Mountain West.
Why These States Tax Lightly
Hawaii: High Home Values, Low Rate
Hawaii's 0.29% is the lowest in the nation, but its very high home values mean the dollar bill is not always the smallest. The state also leans on a high general excise tax for revenue, which shifts burden away from property and onto consumption. The result is a low rate that does not necessarily mean low overall housing cost.
Alabama & Louisiana: Constitutional Limits & Other Taxes
Both states have low effective rates and also collect significant revenue from sales taxes and (in Louisiana's case) energy severance taxes, reducing reliance on property. Louisiana's rate (0.55%) reflects decades of low assessments and a reliance on other sources. Alabama's 0.37% is among the lowest, helped by a state constitution that constrains property taxation.
Mountain West (CO, NV, AZ, UT): Growth & Diversified Revenue
These states pair low property rates with sales-tax and tourism revenue, and (in Utah and Colorado) rapid population growth that spreads the tax base across more taxpayers, keeping per-home rates down. Nevada's reliance on gaming and tourism taxes also offsets property burden.
Delaware & Wyoming: No Sales / Low Burden
Delaware has no sales tax and relies on corporate franchise fees; Wyoming has no individual income tax and leans on mineral severance taxes. Both keep property rates modest because other revenue streams carry the load.
The Catch: Low Rate ≠ Low Total Cost
A low property rate can be offset by higher home prices (Hawaii, Colorado) or higher sales/income taxes elsewhere. Always model your all-in housing cost. Also remember that low-tax states may provide fewer locally funded services, and school quality can vary widely by district. A low property bill does not guarantee low living costs, and in high-price states the dollar tax can still be meaningful.
Don't Forget Exemptions
Even in low-tax states, homestead and senior exemptions reduce your bill further. See our homestead exemption by state guide for specifics. For example, many of these states still offer meaningful senior freezes or disabled-veteran exemptions that compound the rate advantage. South Carolina and Arizona both have valuable homestead-related relief worth claiming.
Retirement Considerations
Low property tax is especially valuable in retirement, when income drops but the tax bill does not. States like Arizona, Utah, and South Carolina are popular with retirees partly because of the combination of low rates and warm climates. But weigh property tax against income tax on retirement distributions, which varies by state — a state with low property tax but taxed retirement income may not be the cheapest overall for a retiree.
How Low-Rate States Fund Services
It is worth understanding the trade. When a state keeps property rates low, the money has to come from somewhere: higher sales taxes (Tennessee, Louisiana), severance taxes on energy (Wyoming, Alaska), tourism/gaming taxes (Nevada, Hawaii), or corporate fees (Delaware). None of these is inherently better or worse, but they shift who pays. Renters, who pay no property tax directly, may still fund schools through sales taxes in these states.
Frequently Asked Questions
Is Hawaii really the cheapest?
By rate, yes (0.29%). But because Hawaii home values are among the highest in the U.S., the typical dollar bill can exceed that of a state with a slightly higher rate and much lower home prices, such as Alabama.
Do low-tax states have worse schools?
Not automatically. Funding comes from many sources. Research specific districts rather than assuming the state rate predicts school quality, and visit schools before relying on the property rate as a proxy.
Will my rate stay low after I buy?
Most of these states reassess annually at market value, so as home prices rise, your assessed value and bill will rise too — just from a low base. A few (like California) cap increases, but California is not in this low-rate group.
Related Resources
- Property Tax Rates by State 2026
- States with the Highest Property Taxes
- Homestead Exemption by State
- Free Property Tax Calculator
County and City Variation in Low-Tax States
Even in the lightest-tax states, your local rate can differ sharply from the state average. Hawaii's 0.29% average masks Honolulu's higher bills and rural counties' lower ones. In South Carolina, the four-percent special assessment ratio for owner-occupied homes makes the effective rate much lower than the nominal levy suggests, but some jurisdictions still vote for higher school or fire-district millage. Utah's 0.48% is fairly uniform, yet resort towns like Park City can assess higher due to local services. The lesson: treat the state ranking as a starting filter, then verify the specific county and municipality before you commit to a purchase. A 15-minute call to the county auditor's office will tell you more than any ranking.
Property Tax vs. Total Cost of Living
Low property tax is only one input into affordability. Consider a household earning $80,000 and buying a $350,000 home:
- Alabama (0.37% property, moderate sales tax, no income tax on most retirement): property tax about $1,300/year — genuinely low all-in.
- Hawaii (0.29% property, high excise/sGE tax, high home prices): property tax about $1,000 on a modest home, but the home itself costs far more, and the excise tax quietly raises everyday prices.
- Colorado (0.50% property, rising home prices, moderate income tax): property tax about $1,750, but a $500,000 median home pushes the dollar burden up despite the low rate.
The pattern repeats across the country: a low percentage on a high value can exceed a high percentage on a low value. Always convert to dollars and add income and sales tax before deciding.
A Retirement Case Study: Arizona vs. South Carolina
Both states appear on the low-rate list and are popular with retirees, but they differ in ways the rate hides. Arizona has a 0.48% effective rate and taxes some retirement income; South Carolina has a 0.49% rate and excludes a large portion of Social Security and pensions from state tax while offering a "state homestead" exemption that can exempt up to $50,000 of fair market value for those 65+. For a retiree with a $400,000 home and $50,000 of retirement income, South Carolina's combined property-plus-income advantage can run several hundred dollars a year ahead of Arizona — even though the property rates are nearly identical. This is why we always recommend modeling the full tax picture, not just the property line.
Why Low-Rate States Still Need Exemptions
A common mistake is assuming a low-rate state needs no planning. In fact, the homestead and senior exemptions in these states are often the difference between a trivial bill and a meaningful one. South Carolina's state homestead exemption, Arizona's additional exemption for those 65+, Utah's 45% exclusion for primary residents, and Alabama's generous senior exemptions all compound the rate advantage. A retiree who files for every available break in a low-tax state can see their effective rate drop below 0.30% — among the lowest carrying costs in the country. The filing is usually free and takes minutes; the savings last as long as you own the home.
When a Low-Rate State Is the Wrong Move
Low property tax should not drive a move by itself. If the state has no income tax but you are a high earner, that is a win; if it has high income tax on your retirement distributions, the property saving may be offset. If home prices are elevated (Hawaii, Colorado), the dollar tax can surprise you. And if the state funds schools thinly, you may pay privately for education or accept lower services. Weigh the whole bundle — property, income, sales, insurance, and services — before treating a low ranking as a green light.
Bottom Line
The lowest-tax states deliver real savings, especially for retirees and those on fixed incomes. But "low rate" is never "low total cost" by itself. Verify the county rate, claim every exemption, convert percentages to dollars, and model income and sales tax alongside property. Done right, a low-tax state can cut your annual housing-related tax bill by thousands versus a high-tax state — provided you look past the headline percentage.
How Low-Tax States Fund Schools
It is worth understanding the trade behind a light property-tax rate. When a state keeps the property rate low, schools and services must be funded another way: higher sales taxes (Tennessee, Louisiana), severance taxes on oil and gas (Wyoming, Alaska, New Mexico), tourism and gaming taxes (Nevada, Hawaii), or corporate franchise fees (Delaware). None of these is inherently better or worse, but they shift who pays. Renters, who pay no property tax directly, may still fund schools through sales taxes. A low property rate is a choice about who bears the burden, not a free lunch.
Five States to Watch
- Hawaii — lowest rate, but high home values and a high excise tax.
- Alabama — among the lowest rates and constitutionally constrained property tax.
- Wyoming — no individual income tax, mineral-funded services.
- South Carolina — a 4% owner-occupied ratio plus a state homestead exemption.
- Utah — a 45% primary-residence exclusion and rapid growth spreading the base.
Relocation Checklist
Before moving to a low-tax state, (1) verify the specific county and city rate; (2) estimate income and sales tax on your situation; (3) confirm home prices and insurance; (4) check the homestead and senior exemptions; and (5) call the county auditor. Fifteen minutes of diligence prevents an expensive surprise, and it turns a headline percentage into a real number you can plan around.