Homeowners in Hawaii pay the lowest effective property tax rate in the country at 0.31%, while the national average annual property tax bill reached $4,062 in 2023, a 4.1% increase from the year before. Where you live determines not just how much you pay but how well your local roads, schools and emergency services get funded.
Why Rates Vary So Much by Region
Property taxes are mostly a local matter. Cities, counties and school districts, not state governments, set most of the rates that show up on a homeowner's bill. That local control means the money raised tends to stay close to home, funding libraries, rec centers, buses, police and fire departments in the same community that pays into them.
In 2023, the geographic pattern was clear. States across the South and West, along with Hawaii, had the lowest effective property tax rates in the nation. The Midwest and Northeast carried the heaviest burdens. That split has held for a while and reflects differences in how states fund schools and services, along with variation in home values and local budgets.
For someone shopping for a larger home or a sizable piece of land, a state's effective tax rate matters a lot, since property tax is charged as a percentage of assessed value covering both the land and whatever is built on it.
The Five States With the Lowest Effective Property Tax Rates
Using 2023 effective tax rates compiled by ATTOM alongside typical home values from Zillow's Home Value Index as of January 2025, here is how the annual property tax bill breaks down in the five cheapest states by rate.
| State | Effective Property Tax Rate | Typical Home Value | Annual Property Taxes (Typical Home) |
|---|---|---|---|
| Hawaii | 0.31% | $831,305 | $2,577 |
| Arizona | 0.41% | $424,842 | $1,742 |
| Alabama | 0.42% | $224,911 | $945 |
| Delaware | 0.43% | $380,840 | $1,638 |
| Tennessee | 0.44% | $318,457 | $1,401 |
Hawaii's rate is the lowest in the country, but its typical home value was also the highest in the nation as of January 2025. A low rate applied to an expensive home still produces a meaningful annual bill of more than $2,500. Arizona tells a similar story on a smaller scale: its typical home value of $424,842 sits well above the national median of $355,328 recorded that same month, so even a 0.41% rate adds up to a real bill.
Alabama looks different. Its rate of 0.42% is close to Arizona's, but home values there run far below the national average, so the typical Alabama homeowner owes under $1,000 a year, the smallest bill on this list. Delaware lands near the middle of the pack, with a typical home value close to the national figure and no state sales tax as an added perk for residents. Tennessee rounds out the group with a low cost of living overall, ranked 11th lowest in the country, and property tax bills that stay modest even though its rate is not the very lowest on this list.
What a Low Rate Does Not Tell You
A cheap effective tax rate does not automatically mean a cheap state to live in. Alabama had the fifth lowest cost of living in the United States in 2024, but its poverty rate stood at 15.6% in 2023, above the national figure. Tennessee's poverty rate of 14% also runs higher than the U.S. median of 12.5%. Low property taxes can coexist with real economic strain elsewhere in a state's finances, so the tax bill alone is not a full picture of affordability.
There are also ways to shrink a property tax bill regardless of which state you live in. Local jurisdictions, counties and states sometimes offer exemptions to qualifying homeowners. The homestead exemption is the most common example: it limits taxation to only part of a property's assessed value for homeowners who meet income or age requirements. Other exemptions exist for veterans, people with disabilities, or those who complete certain home improvements. None of these are automatic. Homeowners have to apply for them directly with their local tax authority to see any savings.
Weighing Rate Against Home Price Before You Buy
Anyone comparing states purely on effective property tax rate risks missing the bigger number: the actual dollar amount owed each year, which depends just as much on home prices as on the rate itself. Hawaii and Arizona both illustrate how a low rate can still translate into a sizable bill once home values are high enough. Shoppers weighing a move or a larger purchase should look at both figures together, and it also pays to shop around for the best mortgage rate available, since that cost will sit alongside property taxes for as long as the loan lasts.