Property Taxes by State

Property tax is the most overlooked cost in home buying. Buyers fixate on the interest rate and down payment, then discover the same $400,000 home can carry a $3,000 tax bill in one state and $10,000 in another — a gap that changes your monthly payment by hundreds of dollars. Here are the highest and lowest tax states in 2026, why the percentage rate alone misleads, and how to turn it into a real monthly number for your budget.

How property tax is calculated

Property tax is a local tax, set by counties, cities and school districts — not by the federal government. Your bill equals your home's assessed value multiplied by the local millage rate. Assessment rules and millage rates vary so widely that two neighbors in adjacent counties can pay very different amounts for the same house.

When people quote a state "property tax rate," they usually mean the effective rate — total property tax paid as a percentage of home value. That is the number that lets you compare states and estimate your bill, and it is what we use throughout this guide.

The highest-tax states

New Jersey leads the nation at an effective rate of about 2.47%, followed closely by Illinois (2.23%), New Hampshire (2.18%) and Connecticut (2.15%). The Northeast and upper Midwest dominate the top of the list, driven largely by high school-district spending.

State	Effective rate	Tax on $400k home
New Jersey	2.47%	$9,880/yr
Illinois	2.23%	$8,920/yr
New Hampshire	2.18%	$8,720/yr
Connecticut	2.15%	$8,600/yr

On New Jersey's roughly $470,000 average home, the typical owner pays about $11,600 a year in property tax — over $960 a month on top of the mortgage itself.

The lowest-tax states

Hawaii (0.28%), Alabama (0.41%), Colorado (0.51%) and Louisiana (0.55%) sit at the bottom of the list. Several of these are low-tax because they rely on other revenue (Hawaii's tourism taxes) or cap assessment growth (Colorado's Gallagher-style and TABOR limits).

But the percentage rate alone misleads — the dollar bill still matters. Hawaii's rock-bottom 0.28% rate applies to an $835,000 average home, so the actual tax check is still around $2,300 a year. The rate is low; the base is huge.

The rate vs. the price: a concrete example

Take the same $400,000 home and move it across state lines:

State	Effective rate	Annual tax	Monthly
New Jersey	2.47%	$9,880	$823
Texas	1.80%	$7,200	$600
Hawaii	0.28%	$1,120	$93

Same-priced home, an $8,000-a-year — $730-a-month — spread between New Jersey and Hawaii. This is why comparing states by property tax matters as much as comparing them by home price.

Why it matters for your budget

A 1% difference in property tax is $333 a month on a $400,000 home — more than most people expect, and more than a typical rate-lock fee or PMI premium. Property tax is baked into your escrow and therefore into your full PITI payment. Ignore it and your "affordable" home can quietly become unaffordable.

Two more things to plan for:

• Taxes rise over time. Unlike a fixed-rate mortgage, property tax is not fixed. Reassessments and new levies push it up most years, which is why escrow payments creep higher.
• New construction jumps. A brand-new home is often taxed on the land only at first, then reassessed at full value a year later — a surprise tax spike many new-build buyers are not warned about.

Frequently asked questions

Which state has the highest property tax?

New Jersey, at an effective rate around 2.47%, followed by Illinois at about 2.23%.

Which state has the lowest property tax?

Hawaii, at around 0.28%, followed by Alabama and Colorado. But remember low rates can still mean high dollar bills if home prices are high.

Is property tax deductible?

Yes, on your federal return, but only if you itemize — and the state and local tax (SALT) deduction is capped at $10,000 a year. See our tax deduction guide for details.

Why is my property tax higher than my neighbor's?

Assessed value, local millage rates, and exemptions (like a homestead exemption) all differ. Neighbors in different districts can pay very different amounts for similar homes.

Browse every state's rate and average home price on our state pages, pre-filled with real local numbers, and plug them into the HomeMath calculator to see your true monthly payment.