Local governments thrive on property taxes, harnessing these funds to fuel critical community-serving projects such as education, infrastructure, parks, public transportation, and all-important emergency services like police and fire departments.
The weight of your property tax bill varies widely from city to city, and state to state. The Tax Foundation research organization reveals that the national average property tax bill was $1,682 in 2021. However, a house in Madison Parish, Louisiana was taxed a mere $215 for the entire year, while numerous counties in New Jersey and New York demanded over $10,000 in annual property taxes. Some Alaskan territories have zero property taxes at all.
To demonstrate the extremes, have a look at this compilation of ten states that offer the lowest property taxes, their current average property value, and that state's median household income.
Notable mentions from the list include Hawaii, boasting the lowest property tax rate in the country in 2019. However, high property values coupled with the highest cost of living in 2021 might offset that favorable tax rate.
Alabama draws attention with both a low property tax rate and home values well below the national average. While the state had one of the lowest living expenses in 2021, but also has a higher poverty rate.
Louisiana, with another low property tax rate and below-average home values, taxes gas at just 20 cents per gallon- amongst the lowest rates in the U.S. But, a high poverty rate of 19% can't be ignored.
Wyoming offers a breather in property taxes and spices it up with no state income tax. With Colorado, residences are pricier but coupled with a higher median household income.
South Carolina and West Virginia share the same property tax rate. Yet, the former, with its lower property value, boasts a friendlier cost of living. Both have a higher poverty rate.
Utah offers some of the more economical property taxes, but high property values and other tax considerations may offset the advantage. Meanwhile, Delaware's homeowners may pay higher property taxes, but enjoy a higher median household income and zero sales tax. Arkansas homeowners appreciate low property taxes and affordable living costs, despite a high sales tax rate.
As per the Tax Foundation's recent data, states taxing property at sky-high rates in 2019 were led by New Jersey, Illinois, and New Hampshire.
While property taxes are universally levied, remote and lightly populated parts of Alaska are the sole exceptions. Depending on the state, county, and local jurisdiction specifics, you may qualify for a property tax exemption like a homestead exemption, veterans' exemption or exemptions for older residents and people with disabilities. Upgrades to a home like installing renewable energy systems may also be incentivized with tax breaks.
Such concessions, however, don't automatically reflect on your tax bill. It's essential to reach out to your local tax collection agency to assess your eligibility for any property tax relief opportunities.