Property Taxes by State: 2024 Guide to Understanding Rates and Exemptions (2024)

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• Property taxes are a major expense that homeowners face annually.
• Your total property tax bill will depend on your home's assessed value and the tax rates for your area.
• Homeowners in New Jersey pay the highest property taxes, while those in Hawaii pay the lowest.

If you want to become a homeowner, you'll want to make sure you can afford your area's property taxes. Because property taxes vary so much from state to state and even county to county, a home that's affordable for you in one part of the country could be a budget-buster in a different zip code.

Here's what to know about property taxes across the country.

What are property taxes?

When you buy a house in the U.S., you'll need to pay property taxes on the home. These are paid annually, can change over time, and go toward paying for various local and government services.

Definition and purpose

Property taxes, also called ad valorem taxes, are a type of governmental tax on real estate. The money from these taxes is used to fund local schools, infrastructure, and services — things like police, EMT, and firefighter departments.

State vs. local taxes

Depending on where you live, you may owe a variety of different property taxes both locally and at the state level. These include taxes charged by your city, county, local government, area school district, local utility district, and your state. There are no states where you can avoid property taxes altogether, but there are many that have no state-level taxes (you'll still pay local taxes, though).

2024 property tax rates by state

Property taxes are calculated by multiplying the tax rate by a home's assessed value. Property tax rates vary quite a bit by state. See below for what tax rates, property tax bills, and median home values look like in each U.S. state and Washington, DC.

State property tax rates and home values

Highest and lowest rates

Property tax rates vary and are based on many factors. Home values, local budgets, tax structures, and state tax laws and policies all play a role.

Currently, New Jersey has the highest effective property tax rate in the U.S. at 2.23%. The median property tax bill there last year was nearly $9,000. The lowest property tax rate is found in Hawaii, where the rate is just 0.32%. The typical homeowner pays only $2,000 in property taxes.

How property taxes are calculated

There are three key numbers that go into calculating what your annual property tax bill will be. These include:

Assessed value

The assessed value is the current market value of your home. This is determined by a local tax appraisal or assessment board and can be based on one of three assessment approaches.

The three assessment approaches include:

• Sales comparison model: This uses local sales data — particularly sales that are similar to your home — to determine a current market value of your property.
• Income model: With this one, the assessor will determine what income the property could produce. This is usually used on commercial buildings and other income-earning properties.
• Cost model: Under this approach, the assessor will use the property's replacement cost, minus depreciation, to determine the value of the home.

The exact assessment data used varies by state and locality, so reach out to your appraisal department to find out how your home is assessed..

Mill levy or tax rate

The mill levy (another term for tax rate) is the amount of tax you'll pay per dollar of your home's assessed value. These rates are set by local governments based on budgetary needs.

You'll take your area's mill rate, multiply it by your assessed property value, and then divide by 1,000 to get your total tax bill. For example, if your assessed value was $300,000, your city had a mill rate of 10, and your local school district had a mill rate of 5, it would look like this: 300,000 x 15 / 1,000 = $4,500. Your total taxes would be $4,500.

Property tax exemptions and deferrals

There's a chance you may be able to reduce that tax bill if you qualify for certain tax exemptions or credits. For example, most homeowners qualify for a homestead exemption, which reduces your taxable value and, subsequently, lowers your tax bill. Exemption options vary by locale, though, so check with your local government to learn about which ones you may qualify for.

For seniors, there may also be property tax deferrals, which allow you to defer payment on your property tax bill. Deferment essentially allows you to delay paying all or a portion of your property taxes until you sell the home or pass away.

Factors that affect property taxes

Your property tax bill can change annually based on a number of factors. These include:

Property value

The value of your property is a big determiner. If your housing market heats up and local home prices rise, your property value — and property taxes — will, too. Conversely, if property values fall in your neighborhood, your taxes could do the same.

Local government spending

Government spending trends also play in. When local government bodies need bigger budgets, they'll increase tax rates to get the funds they need. This leads to higher property taxes for local homeowners.

Tax laws and policies

State and local tax laws have a big impact as well. They can influence both what taxes you're charged, how much they can be, and how you can reduce them (in the case of property tax exemptions and deferrals).

Tips for managing property taxes

Depending on where you live, property taxes could amount to a significant annual expense. Fortunately, there are steps you can take to prepare for those and, potentially, even lower them. Here's what you can do if your property tax bill feels too burdensome:

Understand your property tax bill

The first step is to understand your property tax bill and how your total tax amount was calculated. You should get a property tax assessment in the mail in the spring of each year. This will detail your home's current appraised value, including the value of the land, structure, and any improvements. You will also see any exemptions spelled out, the property address and other basic details, and tax rates for your area.

Keep in mind that these documents can vary from one place to the next, so the information they contain isn't exactly uniform. Reach out to your local assessment board if yours doesn't contain all the information you need to understand your tax bill.

Research exemptions and tax deductions

Next, research any home exemptions you might be eligible for. Some commonly found ones include:

• Homestead exemptions, for primary residences
• Senior exemptions, for homeowners over 65
• Disabled persons exemptions, for those with disabilities
• Veteran exemptions, for veteran homeowners
• Alternate energy exemptions, if your home uses wind or solar energy
• Agricultural exemptions, if the property is used for an agricultural purposes

Exemptions reduce your home's assessed value by a certain amount. (For example, in Texas, you can deduct $40,000 from your home's value when paying school district taxes). This, in turn, reduces your total property tax bill.

If you're a senior, you may also be able to defer your taxes, and for all homeowners, there's also a property tax deduction, which allows you to write off your total property tax bill from your taxable income. While this won't lower your property taxes exactly, it can offset them by saving you on your annual income taxes. Just keep in mind that you need to itemize your returns to take it.

Appeal your assessment

You can also appeal your home's assessed value if you feel it's inaccurate or too high. This process usually requires filing an official property tax appeal with yourappraisal district (the form is often provided with your annual property tax statement) and providing evidence of the home's lower value.

This can include:

• Photos of your property
• Comparable sales data
• Blueprints and architectural drawings
• Outside appraisal documents
• Property surveys
• Repair estimates
• Local real estate listings

You can do this with photos of the property (maybe it's in poor condition or in need of repair) or with local sales data, if other similar homes are selling for less than your assessed value. Talk to a real estate agent if you're considering appealing your assessment, as they can help you pull together data that can help make your case.

You may also need to go before a board in an official hearing to present your case. You can do this yourself or enlist a property tax consultant or an attorney for this (there are some that specialize in property tax appeals).

Make sure you adhere to any deadlines, too. You'll usually need to file your protest fairly quickly after receiving your assessment. From there, you'll get an assigned hearing date and will need to be ready to present evidence to the board (if required).

Plan for property tax payments

Property taxes are due around the same time every year, so it's important to plan ahead. Know what past property tax bills have looked like, and make sure you have the funds on hand to cover those — plus potential increases — when it's time. Consider setting aside funds every month (or week) in small increments to be sure you have enough.

If you have a mortgage, your property taxes usually come out of your escrow account, which you'll pay into each month as part of your monthly payment. While this won't exactly lower your property taxes, it can offset them by saving you on your annual income taxes. Just keep in mind that you need to itemize your returns to take it.

Conclusion

Property taxes can be a big expense for homeowners. In fact, in some states, median property tax bills are nearly $9,000 per year.

If you own a home, it's vital you know how to estimate your property taxes and that you properly save and prepare for these costs before they come due. You should also research tax rates in your state and locality and look for any potential exemptions or deferrals you may be eligible for.

And finally, if you think your property taxes are too high, you may be able to reduce them by protesting your home's value. Talk to a real estate agent if you're considering this strategy.

Property taxes by state FAQs