The lowest property tax states can reduce annual ownership costs, but a low rate does not guarantee a small bill. The amount due also depends on a home’s value and its local assessment. Using 2023 tax rates and typical home values from January 2025, Hawaii, Arizona, Alabama, Delaware and Tennessee lead this comparison.
How property taxes affect the cost of owning a home
Property taxes are charged mainly by local governments, including counties, cities and school districts. The money supports services and public works such as schools, roads, buses, libraries, parks, police and fire departments. What residents receive, and how much they pay, varies by location.
In 2023, the average annual property tax bill in the United States was $4,062, according to ATTOM. That was a 4.1% increase from 2022, after a 3% rise from 2021. The highest effective rates were generally in the Midwest and Northeast. The South and West tended to have lower rates, as did Hawaii.
An effective property tax rate expresses the tax as a share of a property’s value. A homeowner’s bill is based on the assessed value of the land and buildings, not simply the state average. A lower rate can still produce a sizable bill when homes are expensive. Conversely, a higher rate applied to a less costly home can mean a smaller annual payment.
The estimates below pair ATTOM’s 2023 effective rates with Zillow Home Value Index typical home values from January 2025. The annual tax figures are comparisons based on those inputs, not a quote for a particular property or a guarantee of what a homeowner will owe.
| State | Effective rate in 2023 | Typical home value in January 2025 | Estimated annual property tax |
|---|---|---|---|
| Hawaii | 0.31% | $831,305.17 | $2,577.05 |
| Arizona | 0.41% | $424,841.80 | $1,741.85 |
| Alabama | 0.42% | $224,910.79 | $944.63 |
| Delaware | 0.43% | $380,840.16 | $1,637.61 |
| Tennessee | 0.44% | $318,456.50 | $1,401.21 |
Five low rate states, with very different bills
Hawaii recorded the lowest effective rate, 0.31%. Yet its typical home value was $831,305.17 in January 2025, the highest median home price in the country at that time. Applying the rate to that value produces an estimated annual tax of $2,577.05. The low percentage is real, but it does not make a high priced home inexpensive to own.
Arizona’s 0.41% rate also looks modest. Its typical home value, $424,841.80, was above the national median of $355,328 in January 2025. The resulting estimate is $1,741.85 per year. That can exceed the bill for a home in a state with a higher rate if the home there costs less.
Alabama illustrates the other side of the calculation. Its rate, 0.42%, is above Hawaii’s and Arizona’s, but its typical home value was just $224,910.79. The estimated annual bill, $944.63, is the lowest in this group. Alabama’s cost of living ranked fifth lowest in the United States in 2024, while 15.6% of its residents lived in poverty in 2023. Those figures offer broader context, but they do not determine any individual homeowner’s tax bill.
Delaware’s 0.43% rate applied to a typical home value of $380,840.16 yields an estimated $1,637.61 a year, placing it between Arizona and Tennessee in this comparison. The state also has no state sales tax, a separate consideration for household budgets that does not change property tax calculations.
Tennessee’s 0.44% effective rate is the highest of these five, but its typical home value of $318,456.50 was below the national median. Its estimated annual property tax of $1,401.21 is therefore lower than Arizona’s and Delaware’s. Tennessee had the nation’s 11th lowest cost of living, while its poverty rate was 14%, compared with a 12.5% United States median.
What to check before estimating your own tax bill
Statewide averages are a starting point, not a property level forecast. Local governments set and collect most property taxes, so two homes in the same state can face different bills. The assessed value, local rate and any eligible exemptions all matter. A county’s or city’s assessment and tax information is more useful for estimating a specific address than a statewide ranking.
Before making a housing budget, check the latest assessment and property tax rate for the exact location. Then ask the local tax office whether the property qualifies for any relief and how to apply. Some jurisdictions offer a homestead exemption that taxes only part of a property’s value when an owner meets income or age requirements. Other programs may be available to veterans, homeowners with disabilities or people who complete certain renovations.
These reductions are not necessarily applied automatically. Homeowners generally have to claim them, and eligibility rules depend on the state or local jurisdiction. Confirm the criteria, required documents and application process with the relevant office rather than assuming a previous owner’s exemption will carry over.
Finally, compare property taxes alongside the home price and available mortgage rates. Hawaii’s figures show why the rate alone can mislead: the smallest percentage in this group accompanies the highest typical home value and the largest estimated tax bill. A useful comparison starts with the full cost of the particular home, not the state’s place on a tax ranking.