Where Homeowners Face the Smallest Property Tax Bills, Topping Out Below 0.5%

As the costs of owning a home continue to climb, property taxes have grown so unpopular that many states are seeking to cut them or overhaul the system.

Several states have property tax relief measures headed to the ballot, including Florida, Louisiana, North Carolina, Oklahoma, Tennessee, and Wyoming.

There are also five states where the effective property tax rate on owner-occupied homes comes in under half a percent, or below 0.50%: South Carolina (0.49%), Arizona (0.48%), Utah (0.48%), Alabama (0.37%), and Hawaii (0.29%).

According to a Tax Foundation report, these five states have the lowest effective tax rates in the country, based on the most recent available data. All except Alabama were slightly lower than the year before.

That does not automatically mean residents in those states pay the smallest property tax bills, since actual taxes are based on a home’s value. A higher assessment can still lead to a larger bill even when the tax rate is lower.

“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),” Janelle Fritz writes 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 rates and low tax bills

Property taxes help pay for schools, police, fire departments, roads, and other local services, and they are set not only by cities and counties, but also by school boards, fire departments, and utility commissions, according to the report.

Rising home values do not necessarily mean tax rates rise too. “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,” the report says.

Tax bills can also vary sharply from one county to another. For instance, the median property tax bill in Buchanan County, Virginia, is about $404, while in Falls Church City, Virginia, in the Washington metro area, it is more than $10,000. Urban centers generally tend to have higher property taxes.

Hawaii has the lowest property tax rate in the nation, but Honolulu County’s median annual property tax bill is $2,553, well above Buchanan County’s $404, even though Virginia’s effective rate is higher at 0.78%.

Because home values in Hawaii are generally high, tax bills there are not usually a bargain. Even so, a costly home in Honolulu will typically carry a lower property tax bill than a similar home in New Jersey, which has the highest effective tax rate in the country at 1.88%.

New Jersey is tied with Illinois, followed by Connecticut (1.54%), Vermont (1.54%), and New Hampshire (1.50%). Texas, often viewed as a low-tax state because it has no personal income tax or corporate income tax, still ranks No. 7 with an effective property tax rate of 1.40%.

As home prices have surged across the U.S. over the past several years, property tax bills have risen too, even in places with relatively low effective rates.

According to the Federal Reserve Bank of St. Louis, the median home sales price reached $410,700 in the second quarter of 2026, nearly 30% higher than in the second quarter of 2020.

How low taxes are affecting real estate

Experts say low property tax rates can help attract buyers, especially those coming from high-tax states.

South Carolina, ranked No. 46 in the country and among the states with the lowest effective tax rates, continues to draw buyers from New York, Connecticut, and California, according to 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, she says many buyers need to be educated about the state's two-tiered property tax system, in which primary residences are taxed at a lower rate than non-owner-occupied properties such as vacation homes or rental units.

“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 adds that some counties have seen tax rates rise dramatically. “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.

Even so, she says buyers often feel they are getting strong value because prices are still much lower than in states such as New York.

She also points out that lower property taxes must be offset somehow, and in Charleston County, that burden is largely carried by 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 the lower tax rate is also helping push home values higher.

“Low property tax rates drive interest which results in sales,” he tells Realtor.com. “Sales result in higher prices.”

He also sees a connection between low property taxes and migration patterns, especially from Illinois, the state ranked No. 2 in this context.

“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.”

In Arizona, where the effective rate of 0.48% is just below South Carolina’s, local agent Shawna Warner, founding partner at RETSY Forbes Global Properties, says the draw is not only the weather and golf communities but also the lighter tax burden. Arizona also has a flat individual income tax rate 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 says she is seeing more buyers leaving higher-tax states, mostly California, Washington, Oregon, and Chicago.

She notes that some wealthy buyers have left Washington because of its new 9.9% tax on income above $1 million in a single year.

“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.”