Oceanfront home on Oahu Hawaii at sunset. Though Hawaii has high home values, its effective property … [+]
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Property taxes are tricky. Property tax rates can vary by county, municipality, township, and school district. Another interesting aspect of property taxes is the terminology and the way they are often calculated. In many states, counties use what’s called a millage rate, in which the tax rate of one mill represents a tax liability of $1 per $1,000 of assessed value of the property — one one-thousandth, hence the term “mill”.
Thus, when it comes to figuring out the states with the lowest property taxes, there is no statewide property tax rate which states can be ranked against. Instead, the best approach to identifying the states with the lowest property taxes is to determine the effective property tax rate: The real dollar amount paid in real estate taxes as a percentage of the median home value for a state.
In a recent study, Credit Karma analyzed all 50 U.S. states in order to determine which states had the lowest taxes. The study took into account personal income tax rates, state sales tax rates, and effective property tax rates, calculating the latter based on the median amount of real estate taxes paid and the median home value reported in the Census Bureau’s 2020 American Community Survey Five-Year Estimates, the latest data available.
Read on to find out the states with the lowest property taxes in 2022.
10 States With the Lowest Property Taxes
The 10 states with the lowest property taxes are an interesting mix geographically-speaking. Five out of the 10 states are located in the U.S. South region, as designated by the Census Bureau. Four out of the 10 states with the lowest property taxes are located in the U.S. Mountain division. And one state is located in the Pacific division. Below is a breakdown of the 10 states with the lowest property taxes:
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1. Hawaii
Median real estate taxes paid: $1,788
Owner-occupied median home value: $636,400
Effective property tax rate: 0.281%
2. Alabama
Median real estate taxes paid: $608
Owner-occupied median home value: $149,600
Effective property tax rate: 0.406%
3. Colorado
Median real estate taxes paid: $1,868
Owner-occupied median home value: $369,900
Effective property tax rate: 0.505%
4. Louisiana
Median real estate taxes paid: $926
Owner-occupied median home value: $168,100
Effective property tax rate: 0.551%
5. South Carolina
Median real estate taxes paid: $962
Owner-occupied median home value: $170,100
Effective property tax rate: 0.566%
6. Delaware
Median real estate taxes paid: $1,468
Owner-occupied median home value: $258,300
Effective property tax rate: 0.568%
7. Nevada
Median real estate taxes paid: $1,660
Owner-occupied median home value: $290,200
Effective property tax rate: 0.572%
8. West Virginia
Median real estate taxes paid: $719
Owner-occupied median home value: $123,200
Effective property tax rate: 0.584%
9. Utah
Median real estate taxes paid: $1,837
Owner-occupied median home value: $305,400
Effective property tax rate: 0.602%
10. Wyoming
Median real estate taxes paid: $1,380
Owner-occupied median home value: $228,000
Effective property tax rate: 0.605%
In general, the U.S. South and West tend to have lower effective property tax rates than the Midwest and Northeast. Indeed, the difference between the 10 states with the lowest property taxes and the states of the Midwest and Northeast is striking.
Whereas in Hawaii the median real estate taxes paid were $1,788 against a median owner-occupied home value of $636,400, for an effective property tax rate of 0.281%, in New Jersey, the median real estate taxes paid were $8,489 against a median owner-occupied home value of $343,500, equivalent to an effective property tax rate of 2.471%. In the Midwest, Illinois has the highest property taxes: With a median of $4,529 in real estate taxes paid against a median owner-occupied home value of $202,100, Illinois’s effective property tax rate is 2.241%.
You can find out where your state ranks by checking out the full report of states with the lowest taxes in 2022.