A look at estate taxes in the US reveals a stark divide. In more than a dozen states with the nation’s highest taxes, the average homeowner pays more than $10,000 a year.
In 15 states on the other end of the spectrum, the average annual bill is less than $300.
Property taxes are a growing burden on household budgets, but these debts are not high everywhere. The cheapest property taxes are generally found in counties with low effective tax rates and low home values.
Property taxes are levied primarily at the local level, where they fund schools, police departments and other agencies. They make up about 29% of local and state tax collections, according to the Tax Foundation, a tax policy nonprofit that recently updated its analysis of property taxes by state and county.
Nationwide, the average amount paid in property taxes was nearly $1,900 in 2023, according to the Tax Foundation. That number could be even higher now, as rising home values continue to push up property taxes on homes, prompting lawmakers in several states to consider cuts.
Some states rely on high property taxes “in lieu of other major tax brackets,” according to a report by the Tax Foundation, while others have very high taxes across the board. Effective property tax rates range from 0.29% in Hawaii to 1.88% in New Jersey starting in 2024.
Why some states have very low property taxes
Having an annual property tax bill of just a few hundred dollars (rather than a few thousand) can give homeowners flexibility in their budget. But property taxes are one of the costs of home ownership.
It’s also important to understand what property taxes are typically funded by — and the trade-offs that can come with lower property taxes, such as higher income or sales taxes and schools that may have fewer local amenities and services.
“While no taxpayers in high-tax areas will be celebrating their annual payments, property taxes are largely based on a tax benefit principle: People who pay property tax bills are often the beneficiaries of services (e.g., K-12 education, local roads, police and fire, and parks),” the Tax Foundation report wrote.
However, this is not always true. Regions and counties with high property taxes may also have difficulty with federal or municipal debt. In those cases homeowners may pay more to the government and have little to show for it.
US states with the lowest property taxes
Counties with low property taxes tend to have a few things in common: They are often in rural areas in low-tax counties with affordable housing.
In fact, the 15 states with the lowest property taxes are in just four states: Alabama, Alaska, Louisiana and South Dakota.
According to the Tax Foundation, the following places have property tax liabilities of less than $300 in 2024:
- Aleutians East Borough, Alaska
- Bethel Census Site, Alaska
- Copper River Census Area, Alaska
- Kusilvak Census Area, Alaska
- Northwest Arctic Borough, Alaska
- West Carroll Parish, Louisiana
- Lives in Lakota County, South Dakota
- Choctaw County, Alabama
- Tensas state, Louisiana
- Avoyelles Parish, Louisiana
- Allen Parish, Louisiana
- Lamar County, Alabama
- East Carroll Parish, Louisiana
- Perry County, Alabama
- Bibb County, Alabama
More from Mali:
Best Home Loans
Lawmakers Nationwide Fight to Cut Property Taxes. Here’s Why
Why Countries With No Income Tax Are Not As Cheap As They Seem
