As the prices related with proudly owning a home keep rising, property taxes have become so unpopular that there is a long record of states making an attempt to cut back or reform them.
Property tax aid payments will hit ballots this November in Florida, Louisiana, North Carolina, Oklahoma, Tennessee, and Wyoming.
Then there are the 5 states where the efficient property tax price on owner-occupied property falls below half a proportion level, or less than 0.50%. Those states are: South Carolina (0.49%), Arizona (0.48%), Utah (0.48%), Alabama (0.37%), and Hawaii (0.29%).
According to a Tax Foundation report, these 5 states have the lowest efficient tax charges of the 50 states for 2024 (the most latest information accessible) and all, except Alabama, were even barely decrease than they were the 12 months before.
This doesn’t essentially imply that these states will always have the lowest property tax payments, which are tied to the worth of a property. Higher assessments can imply greater tax payments, even with a decrease tax price.
“Since home values vary significantly across counties, it is also important to compare effective tax burdens (the median property tax paid divided by the median value of owner-occupied housing units),” writes Janelle Fritz in the report. “Because property taxes are assessed as a percentage of home values, it follows that higher property taxes are paid in places with higher housing prices.”
Low tax charges and low tax payments
Property taxes, which fund infrastructure and companies such as colleges, police, and fire departments, are set not only by cities and counties, but also by college boards, fire departments, and utility commissions, says the report.
Just because valuations rise, that doesn’t imply that tax charges do as properly. “If homes in a community doubled in value but nothing else in the economy changed, local government wouldn’t necessarily need to capture twice as much revenue,” says the report.
Additionally, tax charges across counties can differ dramatically. For instance, the median property tax invoice in Buchanan County, VA, is about $404 in contrast to more than $10,000 in Falls Church City, VA, which is thought-about half of the Washington metropolitan space. Urban cores have a tendency to have greater property taxes.
The state that ranks lowest for property tax charges is Hawaii. Alexandre ROSA – stock.adobe.com
The state that ranks lowest for property tax charges is Hawaii. Yet, Honolulu County’s median annual property tax invoice is $2,553, much greater than Buchanan County’s $404, despite Virginia having a greater efficient tax price of .78%.
Due to Hawaii’s usually high property valuations, tax payments don’t have a tendency to be a discount. Still, an costly home in Honolulu is sometimes going to have a decrease tax invoice than a comparable one in New Jersey, which has the highest efficient tax price in the nation at 1.88%.
New Jersey is tied with Illinois, then adopted by Connecticut (1.54%), Vermont (1.54%), and new Hampshire (1.50%). Even Texas—thought-about a low-tax state due to having no personal income or company income tax—ranks high at No. 7 with an efficient property tax price of 1.40%.
As home costs all through the nation have soared in the previous 5 or so years, so have property tax payments, even in locations with low efficient tax charges.
According to the Federal Reserve Bank of St. Louis, the median gross sales price for a home has reached $410,700 in the second quarter of 2026—a almost 30% increase since the second quarter of 2020.
How low taxes are affecting real estate
Low tax charges help lure patrons to an space—particularly from states with greater taxes, say consultants.
South Carolina, ranked No. 46 in the nation, with one of the lowest efficient tax charges, brings in patrons from New York, Connecticut, and California, says Charleston County real estate agent Leslie Turner, cofounder of Maison Real Estate.
“Many buyers who are moving to South Carolina from other states mention that the property taxes are much lower here versus their home state,” she tells Realtor.com®. However, the broker says she has to “educate” most patrons on the Southern state’s “two-tiered property tax system,” where major residences are taxed decrease than non-owner-occupied houses such as trip houses or rental properties.
“A property in downtown Charleston with an assessed value of $1,000,000 would have annual property taxes of approximately $4,584, if classified as a primary residence,” she says. “If the same $1 million property was classified as a second home or investment property, the annual property taxes would be about $16,246.”
She also says some counties have seen exponential tax price will increase. “Our property values have been increasing steadily for many years, with many areas seeing an 80%-90% increase in the past six years,” she notes.
However, the broker stresses that since values are so much decrease than in states like New York, “buyers feel they are getting a good value for their investment.”
She notes that since property taxes are decrease, the money to fund native companies wants to come from somewhere else—and in Charleston County’s case, that is gross sales tax, which is around 9%.
“The beauty of a higher sales tax here is that tourists contribute a fair amount to the state, and the tax burden is not just on residents,” she says.
Another South Carolina broker, Justin Winter of Forbes Global Properties, says that the decrease tax price is serving to push home values up.
“Low property tax rates drive interest which results in sales,” he tells Realtor.com. “Sales result in higher prices.”
And he notes a correlation between the decrease property tax price and who is transferring in state, particularly with the No. 2 ranked state, Illinois.
“The state that sends us the greatest number of transplants is Illinois,” he says. “We often hear from those relocating from Illinois that taxes are one of the top reasons for their defection.”
Meanwhile, in Arizona, where the .48% efficient tax price is just a hair below South Carolina’s, native agent Shawna Warner, founding companion at RETSY Forbes Global Properties, says it isn’t just delicate winters and plentiful golf communities that have attracted migrants to Arizona, but the low tax burden. (The state also has a flat particular person income tax price of 2.5%.)
“Buyers are increasingly focused on the overall cost of homeownership, and Arizona’s relatively low property taxes are a meaningful advantage,” she tells Realtor.com. “For many buyers, it’s not just about finding the right home—it’s about the long-term value of living here.”
The Scottsdale-based broker also reports seeing an inflow of patrons fleeing higher-taxed pastures, principally California, Washington, Oregon, and Chicago.
She notes some millionaires have fled from Washington due to its new 9.9% tax on income over $1 million in a single 12 months. (The law goes into impact Jan. 2028.)
“Tax considerations are increasingly part of the conversation for some high-net-worth buyers,” she says. “Arizona’s relatively low property taxes are another appealing factor.”
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