Housing market: Which US states have the highest and the lowest property tax in 2023?

The United States housing market slumped in the second half of 2022 with the value of homes falling by 4.9%, the fastest rate seen since the 2008 housing crisis. The market has slightly increased in value but repeated interest rate increases have been pushing down new sales.

Aside from the list price of the property, there are countless additional expenses to be considered when buying a home, such as the rate of property tax in the area that you are buying.

Property tax is a real estate ad-valorem tax, meaning that it is based on the value of the item in question. Property tax is calculated by the local authority and can vary greatly depending on where you buy. Here are the highest and lowest rates of property tax in the United States.

Highest property tax rates in the US

Lowest property tax rates in the US

How is property tax levied?

Across the country, states and local authorities levy property taxes on an annual basis. Residents typically receive a yearly property tax bill that must be paid to avoid legal repercussions.

All states impose some form of property tax on residents but in some areas there are credits and even exemptions on offer to reduce the amount that you have to pay. The tax is designed to charge those with large, valuable properties more than those with more modest homes.

Currently, Hawaii has the lowest effective property tax rate in the United States but it is possible to find a number of states offering low rates on the mainland too. Many states in the south have a property tax rate below 1%, making it a cheaper option for those who want a big house on a large plot of land.

The taxes themselves are used to support the community and are a key form of income for local authorities across the country. Property taxes are used to fund schools, public transport, parks, road construction and to pay for municipal employees like police and firefighters.