Property Taxes Can Vary by Thousands Depending on the State You Live In

Property taxes can drain thousands of dollars from a homeowner’s budget each year, and new comparisons show how sharply those costs can differ from one state to another.

A Tax Foundation report found that effective residential property tax rates run from 0.29% in Hawaii to 1.88% in New Jersey and Illinois, leaving homeowners with widely different annual bills.

To illustrate the gap, applying those rates to a hypothetical $400,000 home would mean $1,160 in yearly taxes at the lowest rate and $7,520 at the highest. That creates a potential difference of $6,360 a year for homes of equal value, though real tax bills depend on local assessments, exemptions, and other factors.

The findings, drawn from the latest U.S. Census Bureau data, underscore a key point for both current homeowners and prospective buyers: the purchase price is only one part of a home’s long-term cost.

States With the Highest Tax Burdens

New Jersey and Illinois have the nation’s highest effective residential property tax rate at 1.88%, followed by Connecticut at 1.54%, Vermont at 1.51%, and New Hampshire at 1.50%.

Texas is also among the more expensive states for property taxes, with an effective rate of 1.40%. Even without a personal income tax, homeowners there still face heavy local property tax obligations.

At the opposite end of the rankings, five states come in below 0.50%:

• Hawaii: 0.29%
• Alabama: 0.37%
• Arizona: 0.48%
• Utah: 0.48%
• South Carolina: 0.49%

Four of those five states had lower effective rates than the prior year, while Alabama’s rate did not change.

Still, living in a low-rate state does not necessarily mean a lower tax bill.

How County Bills Can Differ

County-level figures from the Tax Foundation show even larger differences in what homeowners actually pay.

In Virginia, the median annual property tax bill in Buchanan County is about $404. In Falls Church City, part of the Washington metropolitan area, the median bill is above $10,000.

That amounts to a difference of more than $9,596 in typical yearly payments between those two Virginia jurisdictions.

Hawaii offers another example. Although the state has the lowest effective rate in the country, Honolulu County’s median annual property tax bill is $2,553 because home values are much higher.

The report also points to several counties in New York and New Jersey where median annual property tax payments top $10,000, showing how local housing prices and location can push bills much higher.

Why Property Taxes Rise

Property taxes fund local services such as public schools, roads, police departments, and fire protection. Rates and assessments are set through decisions made by local governments and other taxing districts.

Rising property values can also increase a homeowner’s tax burden, although higher assessments do not automatically mean governments collect proportionally more revenue.

The Tax Foundation notes that jurisdictions can adjust tax rates to account for changes in property values, while exemptions and assessment rules can also influence individual bills.

For homeowners comparing places to buy, the difference can be substantial. Looking at actual tax history, assessed value, available exemptions, and local tax rules gives a better estimate of future costs than relying on statewide averages alone.

The Tax Foundation’s interactive county and state data lets homeowners compare effective rates and median payments across the country using the latest figures included in its report.