Owning a home is increasingly feeling more out of reach for many Americans.
One of the many factors that add to the pressures and challenges of homeownership is the ongoing cost of property taxes, which persists even after a property is paid off.
For some, property taxes are little more than an afterthought, while for others, they can be a significant financial setback on top of mortgage or insurance payments.
A recent WalletHub study looked at the tax burden of owning real estate across the US and ranked all 50 states by the effective tax rate paid by homeowners in the state. The study used data from the US Census Bureau.
“Property taxes represent a recurring cost that can significantly affect financial planning, savings capacity, and long-term affordability,” Mitchell Franklin, an accounting professor at Le Moyne College in New York, said in the study. “Even if a home’s purchase price appears manageable, high property taxes can dramatically increase the overall cost of ownership and strain household budgets.”
Across the country, states like New Jersey and Illinois top the charts with the highest tax rates of 2.11% and 2.01% respectively.
In New Jersey, the owners of a home priced at the state’s median home value, which in the state is $454,400, pay an annual $9,590.
Meanwhile, in states like Alabama, which has the second-lowest real estate tax rate in the country, the owners of a home at the state’s median home value, which in this case is $209,900, pay about $788 each year.
These 20 US states have the lowest real estate tax rates. See how they rank.
20. Virginia
Effective real estate tax rate: 0.73%
State median home value: $383,700
Annual taxes on a home with a state median value: $2,790
18. (tie) Montana
Effective real estate tax rate: 0.72%
State median home value: $375,800
Annual taxes on a home with a state median value: $2,693
18. (tie) Mississippi
Effective real estate tax rate: 0.72%
State median home value: $169,800
Annual taxes on a home with a state median value: $1,215
16. (tie) New Mexico
Effective real estate tax rate: 0.70%
State median home value: $248,100
Annual taxes on a home with a state median value: $1,731
16. (tie) California
Effective real estate tax rate: 0.70%
State median home value: $734,700
Annual taxes on a home with a state median value: $5,124
15. North Carolina
Effective real estate tax rate: 0.66%
State median home value: $288,900
Annual taxes on a home with a state median value: $1,896
14. Wyoming
Effective real estate tax rate: 0.57%
State median home value: $309,700
Annual taxes on a home with a state median value: $1,767
12. (tie) Louisiana
Effective real estate tax rate: 0.55%
State median home value: $216,500
Annual taxes on a home with a state median value: $1,180
12. (tie) Arkansas
Effective real estate tax rate: 0.55%
State median home value: $188,000
Annual taxes on a home with a state median value: $1,040
11. West Virginia
Effective real estate tax rate: 0.53%
State median home value: $162,600
Annual taxes on a home with a state median value: $865
10. Utah
Effective real estate tax rate: 0.52%
State median home value: $489,400
Annual taxes on a home with a state median value: $2,525
8. (tie) Delaware
Effective real estate tax rate: 0.50%
State median home value: $352,000
Annual taxes on a home with a state median value: $1,768
8. (tie) Tennessee
Effective real estate tax rate: 0.50%
State median home value: $286,700
Annual taxes on a home with a state median value: $1,442
7. Idaho
Effective real estate tax rate: 0.49%
State median home value: $418,600
Annual taxes on a home with a state median value: $2,038
4. (tie) Arizona
Effective real estate tax rate: 0.48%
State median home value: $394,500
Annual taxes on a home with a state median value: $1,879
4. (tie) Colorado
Effective real estate tax rate: 0.48%
State median home value: $539,400
Annual taxes on a home with a state median value: $2,602
4. (tie) South Carolina
Effective real estate tax rate: 0.48%
State median home value: $259,000
Annual taxes on a home with a state median value: $1,251
3. Nevada
Effective real estate tax rate: 0.47%
State median home value: $435,400
Annual taxes on a home with a state median value: $2,027
2. Alabama
Effective real estate tax rate: 0.38%
State median home value: $209,900
Annual taxes on a home with a state median value: $788
1. Hawaii
Effective real estate tax rate: 0.27%
State median home value: $839,100
Annual taxes on a home with a state median value: $2,239
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