Property Tax Rate by State

Hawaii's 0.27% property tax rate is the lowest of any state because Hawaii centralizes more government funding at the state level, reducing the pressure on local governments to extract revenue from property. The state funds public schools through state revenues rather than delegating that responsibility to counties.

Hawaii also uses full market-value assessment, so the 0.27% rate applies to the property's actual selling price. Because home values in Hawaii are the highest in the country (median $814,500), even that low rate generates an average bill around $2,200. Alabama (0.38%) and Nevada (0.47%) follow Hawaii, both states have constitutional or statutory limits on assessment growth that keep effective rates low.

New Hampshire's 1.66% property tax rate, fourth-highest in the country, is the direct consequence of relying on property taxes as the primary government funding mechanism. The state has no income tax and no sales tax, eliminating two of the three major revenue streams most states use. What remains is property tax, and New Hampshire leans heavily on it.

The distributional effect is significant. Renters do not pay property taxes directly, while homeowners with modest incomes bear a heavy burden relative to their wages. A retiree owning a $300,000 home in New Hampshire owes roughly $5,000 per year regardless of income. Several northeastern states have circuit-breaker credits that cap property taxes as a share of income; New Hampshire's programs are limited.

A high property tax rate on a cheap home can produce a smaller bill than a low rate on an expensive one. Illinois has a 2.01% rate on homes with a median value of $247,500, generating an average annual bill near $5,000. Colorado has a rate of just 0.48% on homes with a median value of $493,100, generating an average bill around $2,370. Despite Illinois' rate being four times higher, its median tax bill is only about double Colorado's.

The most useful comparison for individual households is the tax amount in dollars, not the rate. States with high home values and low rates (California, Hawaii, Colorado) often produce bills comparable to states with lower values and higher rates (Ohio, Michigan, Kansas). The rate matters primarily for understanding how burden scales as home values rise.