In this article, we will look into the 15 states with the lowest property taxes in the US. If you want to skip our detailed analysis, you can go directly to the 5 States With the Lowest Property Taxes in the US.
Property Taxes in the US
On April 4, the real estate and property data curator, ATTOM released a report on property tax analysis for single-family homes in the United States. According to the report, a total of $363.3 billion in property taxes were collected from single-family homes in 2023, representing a 6.9% increase from the taxes levied in 2022. This marks the highest increase in the past five years in the US. The report shows that the average tax in the US increased by 4.1%, reaching $4,062 in 2023. In 2023, the effective tax rates increased throughout the year, even with declining home value and rising tax bills. The average home value dropped by 1.7%, as median home sale prices declined. These factors altogether resulted in a slight increase in effective rates. For 2024, the rate trends will rely majorly on home mortgage rates and market rebound. You can also check out the
Property taxes vary significantly across the country. States including New Jersey, New Hampshire, and Illinois are some of the top states with the highest property tax rates in the US. According to ATTOM, for a single-family household, the average tax in New Jersey is $9,400 per year which is 10 times higher than the average amount of tax paid in West Virginia. A similar pattern can be observed in metropolitan areas, with Illinois, Ohio, and Texas having the highest effective rates. Cities such as Akron and Rockford have effective rates of more than 2.4%. On the other hand, Daphne-Fairhope and Honolulu have the lowest effective rates of around 0.3%.
US Housing Market
Forbes reported in its housing market predictions for 2024 that the US housing market is expected to continue facing affordability constraints, due to high home prices and increased interest rates in 2024, citing the comments of the Senior Vice President and Chief Economist at Fannie Mae, Doug Duncan. Fannie Mae forecasts a rise in home sales transactions this year compared to 2023, despite the affordability obstacles in the US. Some experts are of the view that home prices will rise gradually, compared to recent years. However, price fluctuations will persist regionally depending on the local market supply.
On April 23, Reuters reported that after the decline in February, the sales of single-family homes in the US have recovered. However, the momentum can be dampened by the resurrection of mortgage rates. A report from the Commerce Department showed that the median house price reached a seven-month high in February. Affordability issues can arise with the increasing home prices and mortgage rates. New home sales reached 693,000, representing an 8.8% increase in March and the highest since September. Residential investments increased in the first quarter of 2024, after a slowdown in the last quarter of 2023. The sales of new homes increased across all four regions in March, including the Northeast recording a 27.8% uptick, a 5.3% upsurge in the Midwest, and 7.7% in the South.
Major Players in the US Housing Market
Some of the major companies in the US providing residential as well as commercial real estate services include Essex Property Trust, Inc. (NYSE:ESS), Invitation Homes Inc. (NYSE:INVH), and Greystar. Let's discuss them in detail.
Essex Property Trust, Inc. (NYSE:ESS) is a leading real estate investment trust company, specializing in the development and management of residential properties. On March 25, the company announced that it has bought the stake of its joint venture partner, in the BEXEW portfolio for $505 million. The portfolio consists of four properties with 1,480 apartment homes. Essex Property Trust, Inc. (NYSE:ESS) expects a 5.9% year-one yield after fully incorporating this portfolio into its operating platform.
Invitation Homes Inc. (NYSE:INVH) is a single-family home leasing and management firm. On April 8, the company announced that it has agreed to acquire nearly 500 newly built homes, with an investment of around $140 million. These newly built homes will be located in Jacksonville, Nashville, and Charlotte. Invitation Homes Inc. (NYSE:INVH) received 648 newly built homes in 2023. In 2024, the company expects more than 1,000 new deliveries of homes from its new product pipeline.
Greystar is a leading real estate management company, providing property management and investment services. On February 1, the company announced that it has entered into a long term property management services agreement with Wood Partners, a real estate company, specializing in the acquisition, development, construction, and management of housing properties and apartments in the US. Greystar would be managing all assets owned and developed by Wood Partners, under this agreement. Wood Partners' managed portfolio consists of more than 130 institutional quality Class A multifamily properties with 38,000 units under management across 17 states. This will add to Greystar's portfolio and increase it to more than 895,000 units across 3,200 communities.
Rising home prices and mortgage rates are leading to unaffordable housing in the United States. However, states with lower property taxes can help take some of the financial burden off. Additionally, several leading companies in the US are committed to providing top-class and affordable residential as well as commercial properties. With this context, let's have a look at the 15 states with the lowest property taxes in the US. You can also check out some of the biggest real estate companies in the USA.
15 States With the Lowest Property Taxes in the US
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Methodology
To compile our list of the 15 states with the lowest property taxes in the US, we used the latest available property tax paid as a percentage of owner-occupied housing value from the Tax Foundation. For states with similar property tax rates, we have used state and property tax collections per capita to break the tie. The 15 states with the lowest property taxes in the US appear in descending order of their property tax rates on our list.
15 States With the Lowest Property Taxes in the US
13. Idaho
Property Tax (2021): 0.67%
Idaho had a 0.67% property tax paid as a percentage of owner-occupied housing value, with the total collected property tax reaching $1,131 in 2021. It is ranked 15th on our list of the states with the lowest property taxes in the US.
14. Mississippi
Property Tax (2021): 0.67%
Mississippi is ranked 14th on our list. Its property tax paid as a percentage of owner-occupied housing value was 0.67% in 2021. The property tax collected in the state was $1,061 per capita in 2021.
13. New Mexico
Property Tax (2021): 0.67%
New Mexico is ranked 13th on our list of the states with the lowest property taxes in the US. The property tax paid as a percentage of owner-occupied housing value was 0.67% in 2021 in the state. Its state and local tax collections were $832 per capita in 2021.
12. Arkansas
Property Tax (2021): 0.64%
In 2021, property tax paid as a percentage of owner-occupied housing value in Arkansas was 0.64%. The per capita local and state property tax collections reached $776 in 2021. It is one of the states with the lowest property taxes in the United States.
11. Arizona
Property Tax (2021): 0.63%
Arizona ranks 11th on our list. In 2021, the property tax paid as a percentage of owner-occupied housing value was 0.63% in the state.
10. Delaware
Property Tax (2021): 0.61%
Delaware's property tax paid as a percentage of owner-occupied housing value was 0.61% in 2021. The total property tax collected in the state reached $931 per capita in 2021. The state is ranked 10th among the states with the lowest property taxes in the US.
9. Nevada
Property Tax (2021): 0.59%
Another state with a low property tax in the US is Nevada. In 2021, its property tax paid as a percentage of owner-occupied housing value was 0.59%. The per capita local and state property tax collections reached $1,044 in 2021. It is ranked 9th on our list.
8. South Carolina
Property Tax (2021): 0.57%
South Carolina is ranked 8th on our list of the states with the lowest property taxes in the US. In 2021, the property tax paid as a percentage of owner-occupied housing value in South Carolina was 0.57%. Its local and state property tax collections were 1,211 per capita.
7. Utah
Property Tax (2021): 0.57%
Utah had a property tax paid as a percentage of owner-occupied housing value of 0.57% in 2021. The per capita local and state property tax collections reached $1,070 in 2021. It is ranked 7th on our list.
6. West Virginia
Property Tax (2021): 0.57%
West Virginia had a property tax paid as a percentage of owner-occupied housing value of 0.57% in 2021. The total property tax collected in the state reached $950 per capita in 2021. It is ranked 6th on our list of the states with the lowest property taxes in the US.