How Property Tax Is Calculated
Property tax is assessed by local governments (county, city, school district) — not the federal government. Your annual bill is calculated as:
Assessed Value × Effective Tax Rate = Annual Property Tax
Assessed value is often lower than market value (some states assess at 60–80% of market). The effective rate accounts for this — it is the actual tax paid as a percentage of market value, which is what matters for comparison.
2026 Effective Property Tax Rates: All 50 States
Highest Property Tax States
| Rank | State | Effective Rate | Tax on $350k Home |
|---|---|---|---|
| 1 | New Jersey | 2.47% | $8,645 |
| 2 | Illinois | 2.23% | $7,805 |
| 3 | Connecticut | 2.15% | $7,525 |
| 4 | New Hampshire | 2.09% | $7,315 |
| 5 | Vermont | 1.90% | $6,650 |
| 6 | Texas | 1.74% | $6,090 |
| 7 | Wisconsin | 1.73% | $6,055 |
| 8 | New York | 1.73% | $6,055 |
| 9 | Nebraska | 1.67% | $5,845 |
| 10 | Ohio | 1.59% | $5,565 |
Lowest Property Tax States
| Rank | State | Effective Rate | Tax on $350k Home |
|---|---|---|---|
| 50 | Hawaii | 0.28% | $980 |
| 49 | Alabama | 0.40% | $1,400 |
| 48 | Colorado | 0.51% | $1,785 |
| 47 | Nevada | 0.53% | $1,855 |
| 46 | Louisiana | 0.55% | $1,925 |
| 45 | Delaware | 0.57% | $1,995 |
| 44 | South Carolina | 0.57% | $1,995 |
| 43 | Wyoming | 0.58% | $2,030 |
| 42 | West Virginia | 0.59% | $2,065 |
| 41 | Utah | 0.60% | $2,100 |
The No-Income-Tax Paradox
Several states with no income tax compensate through higher property taxes:
| State | Income Tax | Property Tax Rate | Notes |
|---|---|---|---|
| Texas | 0% | 1.74% | High property tax offsets income tax savings |
| New Hampshire | 0% | 2.09% | Highest property tax of any no-income-tax state |
| Nevada | 0% | 0.53% | Relies primarily on sales and gaming revenue |
| Florida | 0% | 0.83% | Mid-range property tax |
| Washington | 0% | 0.93% | Mid-range; capital gains tax on $250k+ |
| Wyoming | 0% | 0.58% | Low property tax; low overall burden |
Wyoming offers the rare combination of zero income tax and low property tax (0.58%). It is frequently cited as the most tax-efficient state overall for high earners with significant property holdings.
California: The Proposition 13 Anomaly
California's effective property tax rate is surprisingly moderate at 0.73% — placing it in the lower half nationally. This is largely due to Proposition 13 (1978), which caps assessed value increases at 2% per year regardless of market appreciation.
A California homeowner who bought in 2005 for $400,000 might still be assessed near $530,000 today, even if market value has reached $900,000. Their annual property tax: ~$5,300.
A new buyer of the same house at $900,000 would pay approximately $9,000/year — the same rate, but applied to the current sale price.
Property Tax and Your Mortgage Payment
Property taxes are typically escrowed into your monthly mortgage payment. At national average rates:
| Home Price | Low-Tax State (0.5%) | Average State (1.1%) | High-Tax State (2.0%) |
|---|---|---|---|
| $250,000 | +$104/mo | +$229/mo | +$417/mo |
| $350,000 | +$146/mo | +$321/mo | +$583/mo |
| $500,000 | +$208/mo | +$458/mo | +$833/mo |
For a $350,000 home, the difference between the lowest (Hawaii) and highest (New Jersey) property tax states is $7,665/year — or $639/month added to your effective housing cost.
Homestead Exemptions
Most states offer homestead exemptions that reduce the assessed value of a primary residence. Examples:
- Texas: $100,000 off assessed value for homeowners 65+ (up to 20% for others)
- Florida: $50,000 off assessed value for primary residents
- Georgia: $2,000 standard; up to $10,000 for seniors in some counties
- California: $7,000 off assessed value (modest given high home values)
Always apply for your state's homestead exemption — it is typically a one-time application and can save hundreds to thousands annually.
Calculate Your Property Tax
Enter your home's value and state to see your estimated annual and monthly property tax obligation, based on 2026 effective rates.