Property Tax by State, and What It Costs on a Real Home

Property tax is the largest tax most homeowners never calculate. It arrives inside an escrow payment, rolled into a monthly mortgage figure, and it keeps arriving after the mortgage is paid off. Over thirty years it can total more than the down payment, and unlike income tax it does not fall when your income does.

It is also the tax with the widest geographic spread. Income tax rates vary by roughly thirteen percentage points across the states. Property tax effective rates vary by a factor of seven and a half, from 0.28% of home value to 2.14%. On the same house, that is the difference between a rounding error and a second car payment.

The mechanism matters here more than in any other tax, because the rate you read about is a statewide average of thousands of separate local levies, and the bill you receive is set by whichever county, city and school district you happen to buy in.

How is property tax actually calculated?

Not as a percentage of what you paid. The assessor sets a market value for the property, applies an assessment ratio to get an assessed value, subtracts any exemptions you qualify for, and multiplies the result by the combined millage rate set by every taxing body that covers the address. A mill is one dollar of tax per $1,000 of taxable value.

Suppose, purely as an illustration of the mechanism, a county uses a 40% assessment ratio, grants a $25,000 homestead exemption, and the combined levy is 30 mills. A home with a market value of $400,000 has an assessed value of $160,000, a taxable value of $135,000 after the exemption, and a tax bill of $4,050. The effective rate is $4,050 divided by $400,000, or 1.01%. Those inputs are illustrative and vary by county; check yours with your assessor.

The effective rate is what makes cross-state comparison possible. It restates the bill as a share of market value, stripping out the different assessment ratios and millage conventions that make raw rates incomparable.

What is the property tax rate in each state?

Effective rates run from 0.28% in Alabama and Hawaii to 2.14% in New Jersey. The table below shows 28 of the 51 jurisdictions, chosen to cover the top and bottom of the range and the largest states. Every jurisdiction not listed falls between the values shown.

Hawaii is the counterintuitive entry. It has the joint lowest effective property tax rate in the country and some of the highest home values, so the low rate applies to a large base and the dollar bill is not as small as the percentage suggests.

How much does the state difference cost over a mortgage?

On a $400,000 home, the gap between New Jersey and Alabama is $7,440 a year. Held flat for thirty years and ignoring reassessment, that is $223,200 of difference on the same house, and it is money that buys no equity.

The thirty-year column is nominal and assumes the assessment never rises, which it will. Treat it as a scale comparison, not a forecast. Use the property tax calculator for a figure based on your state and home value.

The monthly column of the first table is the one that affects what you can buy. A lender qualifies you on the total monthly payment including taxes and insurance. The same borrower approved for a $400,000 home in Alabama, where taxes add $93.33 a month, will be approved for less house in New Jersey, where they add $713.33. The property tax rate quietly sets your purchasing power.

Why is New Hampshire so high and Alabama so low?

Because states fund local government differently. New Hampshire has no individual income tax and no sales tax, so schools and municipal services are paid for almost entirely through property levies, producing a 2.11% effective rate. Alabama runs a graduated income tax with a top rate of 5.00% and a combined sales tax of 9.46%, which lets it keep property rates at 0.28%.

Texas shows the same trade in the other direction from what people expect. It has no income tax, and its 1.71% effective property rate is the sixth highest in the table. The absence of an income tax is paid for at the county courthouse. That trade is worked through in detail on states with no income tax.

California is the opposite case. Its 0.70% effective rate is low for a high-cost state because assessment increases on a property are limited while it stays in the same ownership. Long-time owners pay tax on a value far below market, and recent buyers pay on the purchase price, so two identical neighboring homes can carry very different bills.

What exemptions reduce a property tax bill?

Most states offer a homestead exemption that removes a fixed amount or percentage of value from the taxable base for an owner's primary residence. Many add exemptions or assessment freezes for people over 65, for veterans, for people with disabilities, and for agricultural land.

These are almost never automatic. They require an application, usually once, and often before a deadline early in the year. A homeowner who never files gets the full bill indefinitely. This is the single most common way people overpay property tax, and it is entirely avoidable.

Can I appeal my assessment?

Yes, and the appeal is against the assessed value, not the tax rate. Rates are set by elected bodies through a budget process and are not appealable. Value is a factual question, and if the assessor has your square footage, condition, lot size or comparable sales wrong, that is correctable.

Appeals have short windows, usually a few weeks after the assessment notice arrives. The evidence that works is recent sales of genuinely comparable properties and documented defects. The evidence that does not work is that the bill is higher than last year or higher than you can afford.

Common mistakes

Budgeting from the seller's current tax bill. In states that reassess on sale, the new bill is based on your purchase price, not the previous owner's assessed value. Buyers in California and several other states routinely see the bill double in year two. Ask the assessor what the property will be assessed at after transfer.

Never claiming the homestead exemption. It requires an application in most states and is often missed by first-time buyers who assume it is applied automatically. Check within the first year, because some states will not backdate it.

Using the state average for a specific address. The rates above are statewide averages of thousands of local levies. Within Illinois or Texas, county and school district rates vary enough that the state figure can be off by half. Look up the address.

Assuming an escrow shortfall means an error. When the assessment rises, the escrow account under-collects, and the lender both raises the monthly payment and bills for the shortfall. The result is a payment increase larger than the tax increase, for one year. Check the escrow analysis rather than disputing it.

Missing the appeal window. The right to appeal expires quickly and there is generally no relief for a late filing. Diary the date the assessment notice is expected.

Where the rate comparison misleads

An effective rate is a share of home value, so it tells you nothing about the dollar bill until you fix the value. Hawaii and Alabama share a 0.28% rate and do not share a housing market. A comparison across states is only meaningful when it is run on comparable homes or comparable incomes, not comparable percentages.

Property tax is itemizable, subject to a statutory cap on state and local taxes, but only if your total itemized deductions beat the standard deduction for 2026, which is $16,100 single and $32,200 joint. Most homeowners never clear it.

The rate also says nothing about what the money buys. High property tax states often have well-funded school districts, and buyers pay for that in both the tax bill and the house price. A low rate in a state with poor services can be a worse deal for a family with children, and the difference will not show up in any table of rates.

Finally, this is a tax on an asset, not on income. Retirees on fixed incomes in appreciating neighborhoods face rising bills against flat income, which is why so many states carve out senior freezes. If that is your situation, the exemption rules matter more than the headline rate.

Before you buy or before the assessment lands

• Get the actual combined millage rate for the specific address, not the state average.
• Ask what the property will be reassessed at after the sale closes.
• Apply for the homestead exemption in the first year of ownership.
• Check eligibility for senior, veteran or disability exemptions and freezes.
• Add the monthly tax figure to your affordability calculation before making an offer.
• Note the date the assessment notice arrives and the appeal deadline that follows it.
• Review the annual escrow analysis rather than only the new payment amount.
• Keep comparable sales evidence if you plan to appeal.

What to watch next

Assessment cycles differ by state, from annual reassessment to intervals of several years, so a rate that looks stable can jump when a cycle turns. Several states have introduced or expanded assessment caps and circuit breakers in response to rising home values, which change effective rates without changing millage. Local levies also move with school budgets and bond votes, which happen on local timetables. The statewide figures here are a starting point for comparison, not a substitute for the number your county will actually bill.