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Best and Worst States for Property Taxes

From Tonya Moreno, CPA, former Contributing Writer

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We've all heard Benjamin Franklin's old quote that nothing is certain in life but death and taxes. Welll, that may be especially true for property taxes. No matter where you live in the U.S., if you own real estate you'll have to pay property taxes. However, some states have much higher property taxes than others. The nonprofit Tax Foundation has used Census data over a three year period to find the states with the highest and lowest property taxes.

Best States for Property Taxes

The Tax Foundation ranked the states based on property taxes paid as a percentage of median home value for owner-occupied homes in each state. This is a good way to rank the states because it provides a standardized number for comparison. For example, let’s take a hypothetical situation:
Let’s say someone in State 1 is paying $2,000 a year in property taxes on a home worth $1 million and someone else in State 2 is paying $2,000 a year on a condo worth $150,000. The best way to compare those two states would be to figure the property taxes as a percentage of home value. The person in State 1 is paying only 0.2% of their home value in property taxes, while the person in State 2 is paying 1.33% of their home value in property taxes. When you look at it that way, it’s clear that the person in State 1 is getting the best deal, even though they are both paying the same dollar amount per year.
Using this methodology, the Tax Foundation found that people in Louisiana paid the least in property taxes. The full list of the top ten best states for property taxes along with the percentage of home value paid in property taxes is:

1. Louisiana - 0.18%
2. Hawaii - 0.26%
3. Alabama - 0.33%
4. Delaware - 0.43%
5. West Virginia - 0.49%
6. South Carolina - 0.50%
7. Arkansas - 0.52%
8. Mississippi - 0.52%
9. New Mexico - 0.55%
10. Wyoming - 0.58%

If included in the rankings Washington, D.C. would have came in at 5th best at 0.46% of home value paid in property taxes.

Worst States for Property Taxes

The Tax Foundation found that homeowners in these states paid the most in property taxes compared to home value. The percentages represent the percentage of home value that homeowners pay in property taxes.

1. New Jersey - 1.89%
2. New Hampshire - 1.86%
3. Texas - 1.81%
4. Wisconsin - 1.76%
5. Nebraska - 1.70%
6. Illinois - 1.73%
7. Connecticut - 1.63%
8. Michigan - 1.62%
9. Vermont - 1.59%
10. North Dakota - 1.42%