Property taxes are assessed and collected at the local level — typically by counties, municipalities, and school districts — but they vary so significantly across the country that state-level comparisons remain meaningful. The effective property tax rate, which expresses annual taxes as a percentage of a home's market value, is the most useful way to compare tax burdens across locations with different home prices.

According to the Tax Foundation's 2024 analysis, effective property tax rates range from 0.28% in Hawaii to 2.49% in New Jersey. On a home valued at $400,000, that range translates to annual taxes between $1,120 and $9,960 — a difference of more than $8,800 per year, or $733 per month.

States with the highest effective rates

New Jersey leads the country with an effective rate of approximately 2.49%, driven by the state's heavy reliance on property taxes to fund local services and schools. Illinois follows at around 2.15%, with particularly high rates in the Chicago metropolitan area. Connecticut, at approximately 1.98%, and New Hampshire, at approximately 2.04%, round out the highest-taxing states.

These states often have other characteristics that partially offset the tax burden — strong public school systems, robust municipal services, and in some cases limits on other taxes. But for homeowners, the monthly cash outflow for property taxes is real and significant regardless of what it funds.

It is also worth noting that within high-tax states, the variation by county can be substantial. In New Jersey, for example, effective rates range from approximately 1.7% in some counties to over 3% in others. State averages provide a useful benchmark but cannot capture the specific burden for a specific property.

States with the lowest effective rates

Hawaii has the lowest effective property tax rate in the country at approximately 0.28%, despite having some of the highest home prices. This counterintuitive combination means that a $600,000 home in Hawaii carries a lower annual tax bill than a $200,000 home in New Jersey.

Alabama (0.40%), Colorado (0.51%), and Nevada (0.60%) also have relatively low effective rates. Louisiana and South Carolina are among the lower-taxing states as well, though their rates are somewhat higher.

Lower property tax rates rarely indicate the full overall tax burden — states with low property taxes sometimes have higher income taxes, sales taxes, or other levies. The property tax rate is one component of the full cost of living in a state, not the whole picture.

How property taxes escalate over time

Property taxes are not fixed. As home values are reassessed and local budgets grow, tax bills tend to rise over time. How fast they rise depends on whether the state has laws limiting assessment increases.

California's Proposition 13 caps annual assessed value increases at 2% per year for properties that have not sold, which means longtime homeowners can pay dramatically less in taxes than recent buyers of comparable homes. Washington State's Initiative 747 limits levy increases to 1% annually. Oregon's Measure 50 caps assessed value increases at 3%.

At the other end of the spectrum, states with no caps — including New Jersey, Illinois, and Texas — can see assessment increases that track or exceed home price appreciation. Texas, which has no state income tax, partially offsets that absence through some of the highest property taxes in the country, with an effective rate around 1.6% that can rise 10% per year in the assessed value.

Understanding both the current rate and the likely escalation trajectory is relevant for buyers who plan to stay in a home for many years. The Neighborhood Reality Check tool includes a 5-year projection that incorporates state-specific escalation rates alongside insurance and utility cost trends.