Highest and Lowest Property Tax States

Property taxes can add a few hundred dollars a month to your housing cost, or well over a thousand, depending on where you buy. Comparing effective rates across states shows why location changes the real price of the same home.

Two families buy identical $400,000 homes with identical mortgages. One pays about $107 a month in property taxes. The other pays about $823 a month. Neither made a mistake; they simply bought in different states. Property tax is the most location-dependent part of homeownership, and because it is usually rolled into your monthly escrow payment, it quietly shapes what you can afford just as much as your interest rate does.

The highest-tax states

Measured by effective tax rate, the share of a home's value paid in tax each year, New Jersey sits at the top at roughly 2.47%. Illinois follows at about 2.08%, with other Northeastern and Midwestern states also ranking high. On a $400,000 home, the math looks like this:

• New Jersey (2.47%): about $9,880 per year, or $823 per month
• Illinois (2.08%): about $8,320 per year, or $693 per month

High-tax states often fund schools and local services heavily through property taxes rather than other revenue, and many have high home values as well, which compounds the dollar amounts. Our property tax guide explains how assessments, mill rates, and exemptions combine into your actual bill.

The lowest-tax states

At the other end, Hawaii has the lowest effective rate in the country at roughly 0.32%, and Colorado is also among the lowest at about 0.49%. On that same $400,000 home:

• Hawaii (0.32%): about $1,280 per year, or $107 per month
• Colorado (0.49%): about $1,960 per year, or $163 per month

The difference between the New Jersey and Hawaii examples is roughly $716 every month, which is more than many car payments. Over a 30-year mortgage, that gap exceeds $250,000 in taxes alone. You can see your own state's figures on our mortgage calculator by state hub, which builds typical local tax and insurance costs into each state's payment estimates.

Why the rate alone can mislead you

Before you conclude that Hawaii is a tax bargain and New Jersey is not, consider three complications. First, home prices differ. Hawaii's homes are among the most expensive in the nation, so a low rate applied to a very expensive home can still produce a large bill in dollars, and the purchase itself costs far more. Second, assessed value is not market value everywhere. Some states assess at a fraction of market value, offer homestead exemptions that shield part of the value, or cap how fast assessments can rise, so two states with similar headline rates can produce very different bills.

Third, states trade taxes off against each other. A state with low property taxes may lean more on income or sales taxes, and vice versa. Smart movers compare their total tax picture and total housing cost, not a single line item. Also remember that within any state, rates vary by county, city, and school district, sometimes dramatically. The house ten minutes across a county line can carry a noticeably different bill.

What this means for your budget

When you compare homes across state lines, or even across counties, always compare the full monthly payment rather than the price. Run each scenario through the mortgage payment calculator with the local tax rate entered, and you will see cases where a cheaper home in a high-tax area costs more per month than a pricier home in a low-tax area. Also budget for increases: assessments usually rise with home values, so your escrow payment will likely creep up over the years even though your loan principal and interest stay fixed. Finally, check for exemptions you qualify for, such as homestead, senior, veteran, or disability exemptions, which can trim your bill every year you own the home.