List of States that Have the Lowest Property Taxes

3 April 2020

There are no states with the absence of property taxes. Every state in the US has some form of property tax. The spectrum is quite wide – in some parts of the country, the taxes are very low, in the other states they are astronomically high, depending oh the jurisdiction. 

An average American citizen pays about $2,375 property tax. According to the statistics by NTLA, more than $14 billion taxes remain unpaid per year. Recently the IRS announced that it obliges the taxpayers with income more than $100,000 to pay off the debts for 2018 or prior years.

It is worth noting that the term ‘property tax’ covers not only real estate but also the other types of property like vehicles and other assets. The taxes are the basis for the city funding, the salaries for state workers and the maintenance of the schools in the region. 

Every state has its own formula to calculate the rate of the taxes. This formula typically includes two important components – the estimated value and the tax rate. The latter is a percentage of the property’s value. 
Some states have tax exemptions for the following population groups:

  • senior citizens;
  • people with disabilities;
  • veterans. 

Sometimes there is the homestead exemption when the person lives in the house that he or she owns instead of renting it out. 

Further, we will list the states with the lowest level of property taxes in the U.S.

United States Flag
United States Flag

Hawaii

Despite the fact that Hawaii has quite a high income tax rate – 11%, the property tax rate equals 0.27% of the property value per year. This is the lowest index in the country. However, the real estate investor should take into account that the properties in Hawaii are quite expensive. That is why the average amount of the taxes paid by homeowners annually equals $1,607 which is in the middle of the spectrum across the country.

Alabama

Alabama is at the top of the states with the lowest taxes for the property in the U.S. The taxes in Alabama are the means for education, local authorities, and public services. The owner of the property in this state usually pays about $572 in taxes, in comparison with the average amount per country. The percentage of the property tax rate in Alabama is 0.42%.

Louisiana

The property tax rate in Louisiana is 0.53% which is one of the lowest indexes in the United States. The homeowner of the house typically pays about $840 property tax. Moreover, in some parishes as Madison and Avoyelles the average homeowner pays $200 annually. 

West Virginia

West Virginia is one more state with the lowest rate of property taxes in the United States which is 0.59%. The average owner of the property in the Mountain State pays $678 per year. In addition, it is noteworthy that the average value of the house in West Virginia is also quite low which makes this state a good market for investing.

Wyoming

The State of Wyoming has a higher property tax rate than the previous states but there is no tax for the income. Cowboy State is a good choice for the investor who is looking to lower the yearly tax payments. The effective property tax index in Wyoming is 0.61%, along with the average sum paid by the homeowner which is about $1.298 annually.

South Carolina

The effective property tax rate in South Carolina is 0.57%, which is lower than the average national rate – 1.08%. The property tax index in this state comprises the assessed value of the house and local tax index. The amount of the tax depends on the type of real estate. If the house is the primary residence, then this rate will be 4%. If the property is non-primary residence, then the amount will be 6%. The average owner of the property in South Carolina pays $887 per year.

Delaware

One of the features of the taxation system in Delaware is the fact that the local government does not reassess the properties regularly each year. The taxes are counted depending on the value during the last reassessment of the property. The value is reassessed when the owner makes some changes in the real estate. This is called the reassessment year. For instance, the reassessment year in Sussex County is 1974. The property tax amount in Delaware is estimated in 0.56%. The average annual tax payment is about $1.377.

Colorado

Colorado takes eight place in the list of the states with the lowest residential property tax. The average rate of the property tax is 0.53%. The residential taxes in Colorado are calculated depending on two indexes – the total tax rates determined by the local authorities and the market value of the real estate. The price of the property is determined by the price of comparables in the neighborhood. The annual amount of the tax for the property is about $1.647.

Arkansas

Property taxes in Arkansas are typically determined by the appraisers. Appraised value equals the value of the property at the market. However, the tax rate depends on the assessed value of the house. The latter amount is 20% of the appraised value. The assessed value of the real estate can not raise at more than 5% per year, even if the value of the property in the market increases. The property tax in the state is 0.63% with the average tax payment $776 per year.

Mississipi

The property taxes in Mississipi fund local education and governments. The taxes for owner-occupied properties in the state are 10% of the property value in the market. For the other types of properties, this amount is 15%. The value of the property is reassessed every four years by the specialist. The property tax rate in Mississipi is 0.80%. The median annual payment in this state equals $879.

Conclusion

The property tax in every state is calculated in different ways, taking into account various criteria – the market value of the real estate, the assessed value, and some exemptions, like homestead exemption and others. In you need any help related to real estate market – do not hesitate to contact us!

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