If you’re a homeowner, you know that property taxes can add up to a significant expense. However, in some states, you can save a considerable amount of money on property taxes due to their low median tax rates. In fact, there are states where the property tax rate is so low that it almost feels like there are none at all.

So I decided to explore the top 10 states with no property taxes or, rather, significantly lower median rates than most other states. I’ll also discuss how property taxes are collected and calculated in each of these states, and a couple of advantages of living in one of them.

So, if you’re looking to save money on taxes, let’s take a look at the states where you can benefit from almost zero property taxes on average.

US States With No Property Taxes

Hawaii

Known for its tropical climate, Hawaii has beautiful beaches and a high cost of living. And another advantage of living there is that it has the lowest median property tax rate in the United States. According to the Tax Foundation, Hawaii’s median property tax rate is only 0.28%.

In Hawaii, property taxes are collected by the county government and vary from island to island. The rate is determined by the assessed value of the property, which is based on its market value.

Property owners here are required to pay property taxes twice a year, in February and August.

Alabama

This is a southern state known for its hospitality, football, and rich history. And a great advantage of living here is its relatively low property tax rate.

Alabama’s median property tax rate is only 0.40%…

Property taxes are also collected by the county government and vary by location. The rate is based on the assessed value of the property, which is determined by the county’s tax assessor.

Property owners in Alabama are required to pay property taxes once a year, in October.

Colorado

This is a mountainous state known for its outdoor recreation, skiing, and craft beer. It also has a relatively low property tax rate of only 0.49%.

In Colorado, property taxes are collected by the county government and, again, vary by specific location. The rate is also based on your property’s value, determined by your county’s tax assessor. 

Like Hawaii, property owners in Colorado are required to pay property taxes twice a year, but in February and June.

Louisiana

Louisiana is a southern state known for its Cajun and Creole cuisine, music, and culture, with a median property tax rate of only 0.53%.

Property owners pay property taxes once a year, in December…

In Louisiana, property taxes are collected by the parish government and will vary depending on the exact location. The parish’s tax assessor assesses the value of your property and calculates from there. 

Nevada

With the same property tax rate as Louisiana, Nevada is a western state known for its casinos, entertainment, and desert landscapes. 

So, with a median of 0.53%…

In Nevada, property taxes are collected by the county government. Property owners pay their property taxes twice a year, in August and October. Based on the assessed value of a property, determined by a county tax assessor. 

Other US States with Very Low Property Tax Rates

Washington, DC

Washington, DC, the capital of the United States, is home to many national landmarks and monuments. It has a median property tax rate of only 0.56%.

Residents pay property taxes twice a year, in March and September.

South Carolina

With a property tax rate of only 0.55%, South Carolina is a southeastern state known for its beaches, historic landmarks, and southern charm. 

Those living in this state only pay tax on property once a year, usually in December.

Delaware

Delaware is a small state on the East Coast known for its overall tax-friendly environment and beaches. It has a median property tax rate of only 0.56%.

June or July are the months when property taxes are paid, depending on your county.

West Virginia

Property owners in West Virginia are required to pay property taxes twice a year, in September and in March.

Of only 0.57%…

Residents also enjoy a mountainous area boasting outdoor recreation and rich history. 

Wyoming

Another western state known for its natural beauty and outdoor recreation, Wyoming enjoys its cowboy culture. It has a median property tax rate of only 0.57%, paid once a year, usually in November.

Benefits of States with No Property Taxes

Lower Cost of Living 

One of the primary benefits of living in a state with no or very low property taxes is, of course, the lower cost of living. Property taxes are often a significant expense for many, so living in a state with low property taxes can result in significant savings over time.

More Disposable Income 

By paying less in taxes, you have more disposable income to spend on other things. This could include home improvements, travel, education, or investing in other assets.

Boost for Local Economy 

Believe it or not, lower property taxes can also be a boost for the local economy. This is because, by reducing homeowners’ financial burden, they may have more money to spend in their community, which can stimulate local businesses.

Greater Affordability for First-Time Homebuyers 

Lower property taxes can also make homeownership more affordable for first-time homebuyers. And by reducing the overall cost of owning a home, more people are able to enter the housing market.

Attractiveness to Retirees 

States with no or low property taxes can be particularly attractive to retirees who are living on a fixed income. Again, these lower taxes mean more money in their pockets, which can help them maintain a comfortable retirement lifestyle.

Drawbacks of States with Low Property Taxes

Higher Sales and Income Taxes

Unfortunately, these states with low property taxes often rely more heavily on other forms of taxation, such as sales and income taxes. So, you may end up paying more in these other areas to make up for the shortfall in property tax revenue.

Decreased Funding for Public Services 

Property taxes are an important source of revenue for local governments and fund public services such as schools, parks, and road maintenance. So, these states may have a harder time funding these services, which can lead to reduced quality or availability of public services.

Lack of Flexibility for Local Governments 

Taxes on property ownership provide local governments with a degree of flexibility in managing their budgets. Without this revenue source, they may have less control over their finances. Making it harder to respond to unexpected expenses or economic downturns.

Higher Tax Burden for Low-Income Homeowners 

While low property taxes can benefit many, they may not be as beneficial for low-income homeowners who may struggle to pay other taxes, such as sales and income taxes. This could create a disproportionate tax burden for low-income households.

Potential for Tax Increases 

As you can see, states with very low property taxes may face pressure to periodically increase other taxes to maintain revenue levels. This could result in higher taxes overall and even offset any savings you may enjoy from lower property taxes.

What to Keep in Mind

When you’re in the market to buy a house, property taxes don’t necessarily have to be the first thing on your mind, as you have seen. However, it’s important to consider the property tax rates of the area you’re looking at before making a purchase. 

Here are some things to keep in mind when evaluating property tax rates:

Rates Vary by Location

Property tax rates are set by local governments, such as counties, parishes, or cities. This means that rates can vary significantly depending on where you’re looking to buy.

For example, one county may have a tax rate of 0.5%, while another county just a few miles away may have a rate of 2%. 

That’s a huge difference!

So, make sure to research the rates for the specific area you’re interested in, rather than relying on statewide averages.

Do The Math

As we just showed you, the tax rates vary even within the same state. So this is where you need to bring out the calculators.

For example, if you purchase a $300,000 home in Hawaii with a 0.28% property tax rate, your annual property taxes would be just $840. In contrast, if you purchased a similarly priced home in Hawaii with a 1% property tax rate, you would be paying $3,000 per year.

Tax Rates Can Change

It’s also important to keep in mind that property tax rates can and do change over time. Local governments may increase or decrease property tax rates in response to changing economic conditions, budget needs, or other factors. 

This means that even if you find a home in an area with low property tax rates now, those rates could increase significantly in the future. 

So once again…

Make sure to do your research on historical property tax rates for the area you’re considering, as well as any trends or projections for future rates.

Rates May Differ Based on the Type of Property

When evaluating property taxes, it’s crucial to know that rates can, again, vary depending on the type of property you’re purchasing. For instance, residential properties such as single-family homes, condos, and townhomes usually have a different tax rate than commercial properties such as office buildings, retail spaces, or warehouses. 

This is because commercial properties often have a higher value and generate more income for the owner, leading to a higher tax rate.

So, research the specific tax rate for the type of property you’re interested in purchasing. This information can often be found on the local government website or by contacting the relevant tax authority. 

Property Tax Rates Have Exemptions

In addition to considering everything outlined so far, it’s also advisable to research whether there are any exemptions available. Some local governments offer exemptions for certain types of properties or for specific groups of people, such as veterans or senior citizens. These can reduce the amount of property tax that you’re required to pay.

But there’s more…

In addition, most states offer a homestead exemption, which reduces the taxable value of a property that is used as the owner’s primary residence. Other exemptions may apply to properties used for certain purposes, such as agricultural land or old properties.

Knowledge is power…

Since exemptions can significantly impact the amount of property tax you’re required to pay, you’ll want to actively explore them to potentially reap these benefits.

Property Tax Rates Are Just One Factor To Consider

Finally, please remember that property tax rates are just one of many factors to consider when buying a home. 

Other important considerations include the overall cost of living in the area, the quality of local schools, access to amenities like parks and shopping centers, and the availability of job opportunities. 

Because no tax deduction is worth a poor quality of living overall…

So, weigh all of these factors together to make an informed decision about the best place for you to buy a home.

Frequently Asked Questions

How do property tax rates affect home values?

These rates can definitely impact home values, as higher tax rates can make homes less affordable for buyers. However, the relationship between property tax rates and home values is complex and depends on a variety of factors, including the overall tax burden in a given state and the quality of government services.

Can property taxes be appealed or reduced?

Yes, property taxes can often be appealed or reduced if a homeowner believes that their assessed value is too high. Most of the time, you can appeal your property tax assessment by showing proof to your local tax assessor’s office, such as recent home sales in your neighborhood or proof that the property has structural damage. However, you’ll need to research the specific appeals process in a given state, as the process can vary widely.

Can property rates be negotiated with local government officials?

No, property tax rates cannot be negotiated with local government officials, as they are set by state law. However, as just mentioned, you may be able to appeal your property tax assessment if you can prove it is too high. 

How often do tax rates change in states that do have property taxes?

They can change annually or bi-annually, depending on the state or local government’s budgetary process. In some cases, changes may occur more frequently due to changes in property values or assessments. 

How do rates vary between urban and rural areas?

Property tax rates can vary widely between urban and rural areas, as well as between different regions within a state. Generally, urban areas tend to have higher property tax rates due to the greater demand for public services and higher property values. Rural areas may have lower rates, but they may also have less access to government services.

Can property taxes be paid in installments?

Many states allow property taxes to be paid in installments, usually quarterly or semi-annually. This can help you manage the cost of your property tax bill throughout the year. To avoid penalties or late fees, one must take the time to learn about the payment options and due dates in any given state.

What happens if property taxes are not paid?

In this event, the government may place a lien on the property, which gives the government the right to sell the property to recover the unpaid taxes. In some cases, the government may also charge interest or penalties on unpaid property taxes. Therefore, it is crucial for you to stay up-to-date on your property tax payments to avoid these consequences.

How can you estimate your property tax bill before buying a house?

You can get a rough idea of this figure by multiplying the property’s assessed value by the tax rate in that area. But do remember that assessed values can vary a lot depending on things like recent home sales in the area, improvements made to the property, and changes in the local real estate market. You can contact the office of your local tax assessor to learn more about how assessed values are set.

Can they be deducted from federal income taxes?

Yes, property taxes can be deducted from federal income taxes up to a certain limit. The Tax Cuts and Jobs Act of 2017 capped the amount of state and local taxes that could be deducted at $10,000 per year, including your property taxes. So this means that you can only deduct up to $10,000 in property taxes from your federal income taxes each year.

Relocating and Considering Future Costs?

If so, there are a few other articles you may be interested in. For professionals, have a look at these Questions to Ask Before Accepting a Job Offer and the Reasons Why You Should Take a Contract. You might also want to know, Is Overtime Taxed More, or all about Telecommuting Jobs with No Location Requirement in 2023?

If you’ll be traveling through various states on your way…

Then why not prepare yourself by learning about the 10 Most Dangerous States in the US, and the 10 Most Dangerous Cities in the US, to avoid passing through?

Want to be near the beach?

Then, check out the Cheapest Places to Live in California and Best Places to Live in Florida for Families as options! And if downsizing appeals to you, don’t miss our guide to How to Turn a Closet into a Home Office and the overall Cost of Building a Shipping Container Home!

Also, read about the Home Depot Project Loan and how you can use this to finance potential building projects when you relocate. We also provide insider tips for ongoing family cost-savings, such as eating out at these Best Cheap Restaurants for a Group and everything you need to know about How To Buy Amazon Returns!

Ok, back to today’s US state property tax rate discussion…

Final Thoughts

While there is no such thing as a “property tax-free state,” some states have a relatively low median property tax rate. In these states, you can save thousands of dollars each year on property taxes, which can be a significant financial advantage.

But it’s important to remember that property taxes are a key way to pay for public services that everyone needs. So, even in states with low property tax rates, property owners still have to pay their fair share. Sometimes through other taxes.

Moreover, if you want to buy a home in one of the above low-property-tax states, you should also think about the cost of the house overall. As this will have a big effect on your monthly mortgage payments and your budget as a whole. Plus, of course, the figure the tax assessor is using to calculate your rate.

Happy home hunting!