Property taxes have become so burdensome that many states are working to lower or even abolish them. Then there’s a state like Alabama.
While the average U.S. household pays $3,119 per year in property taxes, in this Southern state, the average homeowner shells out a much lower $788, according to WalletHub’s Property Taxes by State in 2026 report.
Yet, Alabama does not beat Hawaii when it comes to low property taxes. While the average bill may be less overall in the Heart of Dixie, the Aloha State has a lower “effective real estate tax rate,” though the average amount paid ($2,239) is much higher. (Both are a bargain compared with the $9,590 the typical homeowner in New Jersey—the state with the highest tax burden—pays.)
The 10 states with the lowest property tax burden, according to WalletHub, from lowest to highest, are: Hawaii; Alabama; Nevada; Arizona, Colorado, and South Carolina (tied); Idaho; Delaware and Tennessee (tied); and Utah.
To determine the states with the highest and lowest property tax burden, WalletHub calculated a state’s effective real-estate tax rate by dividing the median real estate tax payment by the median home price in each state.
“Buyers should be conscious of the property tax obligations on the home they’re targeting because they create a monthly payment obligation that could make a difference in their budget and whether or not they can afford the home,” says Joel Berner, senior economist at Realtor.com®.
The downsides of low or no property taxes
No property tax, no problem, right? Not necessarily, say experts.
“Alabama is much more affordable, with lower property taxes along with low state income taxes,” notes Martin Orefice, founder of Rent to Own Labs. “The issue is that there just aren’t as many jobs, schools, or other amenities. This drives demand down quite a bit and contributes to low [home] prices.”
As for states trying to eliminate property taxes altogether (Ohio, South Dakota, North Dakota, Nebraska, Kansas, Pennsylvania, and Florida are at the forefront of this potential outcome), WalletHub writer and analyst Chip Lupo says that’s a shortsighted idea.
“Abolishing property taxes altogether would create bigger problems,” he tells Realtor.com. “They fund a large share of school budgets and local services like police and fire.”
After all, no property taxes are great until you need to call 911 and nobody answers.
“If states eliminate [property taxes], they would have to either cut essential services or significantly raise other taxes, such as sales taxes, which can be even more regressive,” Lupo says. “Property taxes remain essential, so cutting them would likely mean higher taxes elsewhere or cuts to critical public services.”
Does a low tax bill mean more homebuyers?
“Very few buyers, if any, are shopping in Hawaii because of its [low] property tax rates,” Matthew G. Beall, CEO of Hawai’i Life/Forbes Global Properties, tells Realtor.com about No. 1 ranked Hawaii.
“It might be an item on the list of things that slow down out-migration, especially for people who may have moved to Hawaii during the COVID-19 pandemic and weren’t sure how long they might stay.”
In fact, given that Hawaii is seriously considering shifting the tax burden to snowbirds, there could be more selling than buying in the near future.
(Realtor.com)
“It’s worth noting that many of Hawaii’s counties are enacting and/or proposing legislation to raise property taxes,” Beall says. “Especially for second homes and vacation rentals—and that has definitely triggered more considerations for selling.”
Nor have low property taxes done much to keep the state’s home prices in check—the median is $750,000, well over the national of $399,950, according to Realtor.com data.
“There isn’t a simple, direct link between low property-tax rates and low home prices,” explains Lupo. “In Hawaii, for example, limited land and strong demand lead to high home prices despite a low tax rate. Alabama, on the other hand, combines a low tax rate with relatively low housing demand, keeping costs modest.”
How much should you take property taxes into consideration when buying a house?
“There are always trade-offs, like living in states with higher income taxes and low property taxes, or paying more in property taxes to live in an area with good public schools,” says Berner.
“Property taxes are probably not going to be the main driver of a buyer choosing where to live, but they’re an important consideration when high home prices and mortgage rates are squeezing affordability so tight.”
Here are the 10 states with the lowest property taxes, according to WalletHub:
Hawaii
Effective real-estate tax rate: 0.27%
Annual taxes on a home priced at the state median value: $2,239
January median home list price, per Realtor.com: $750,000
Alabama
Effective real-estate tax rate: 0.38%
Annual taxes on a home priced at the state median value: $788
January median home list price, per Realtor.com: $325,400
Nevada
Effective real-estate tax rate: 0.47%
Annual taxes on a home priced at the state median value: $2,027
January median home list price, per Realtor.com: $479,000
Arizona
Effective real-estate tax rate: 0.48%
Annual taxes on a home priced at the state median value: $1,879
January median home list price, per Realtor.com: $469,028
Colorado
Effective real-estate tax rate: 0.48%
Annual taxes on a home priced at the state median value: $2,602
January median home list price, per Realtor.com: $548,900
South Carolina
Effective real-estate tax rate: 0.48%
Annual taxes on a home priced at the state median value: $1,251
January median home list price, per Realtor.com: $350,000
Idaho
Effective real-estate tax rate: 0.49%
Annual taxes on a home priced at the state median value: $2,038
January median home list price, per Realtor.com: $569,000
Delaware
Effective real-estate tax rate: 0.50%
Annual taxes on a home priced at the state median value: $1,768
January median home list price, per Realtor.com: $480,950
Tennessee
Effective real-estate tax rate: 0.50%
Annual taxes on a home priced at the state median value: $1,442
January median home list price, per Realtor.com: $419,023
Utah
Effective real-estate tax rate: 0.52%
Annual taxes on a home priced at the state median value: $2,525
January median home list price, per Realtor.com: $572,500