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Unfortunately, property taxes are an unavoidable expense for home and property owners no matter where you live (or conduct business) in the United States. All 50 states and the District of Columbia charge property taxes to homeowners based on the value of a property, although you can offset those costs through tax breaks and other incentives.
For example, you can deduct what you paid in property taxes throughout the year when you file your federal income tax return. This tax break reduces the amount of tax you owe and might even help you qualify for a refund. In some cases, you could also be exempt from paying property taxes based on household income and other eligibility requirements. These perks vary by state and municipality.
Local governments typically impose property taxes on city, county and school district residents. But state governments are the entities that usually levy personal property taxes. Property tax bills are almost always issued once a year.
So, What Are the ‘Best’ Property Tax Breaks?
Determining the “best” property tax incentives in 2024 is tricky because you get similar tax perks across the U.S. According to the IRS, state and local real property taxes are “generally deductible” in all states and include any state or local taxes based on the value of the real property.
Some states pay you to move there — including Alaska, Vermont and West Virginia — but these incentives don’t involve breaks on property taxes. If you want to know which states offer the best property tax incentives, it usually comes down to how much you actually have to pay in property taxes. Lower tax rates can be a powerful incentive for property owners.
To get an idea of how location plays a major role in your property tax bill, research the different rates around the country. New Jersey has the highest effective property tax rate, at 2.23% of the assessed value of a home. Hawaii has the lowest, at 0.32%. What this means is that if you own a $500,000 home, you will pay about $11,150 in property taxes in New Jersey and about $1,600 in Hawaii.
In 2023, the average New Jersey property tax bill topped $9,800, according to New Jersey Spotlight News. In contrast, the median property tax bill in Alabama — which has the second-lowest rates in the country — was only $646, according to data cited by CNBC.
When it comes to the best property tax incentives in 2024, these are the 10 states with the lowest rates, according to data compiled by Rocket Mortgage:
- Hawaii: 0.32% effective tax rate
- Alabama: 0.40%
- Colorado: 0.55%
- Wyoming: 0.56%
- Louisiana: 0.56%
- South Carolina: 0.57%
- West Virginia: 0.57%
- Utah: 0.57%
- Nevada: 0.59%
- Delaware: 0.61%
If you want to know which states to avoid if you want to keep your property tax bill low, these five states have the highest tax rates:
- New Jersey: 2.23%
- Illinois: 2.08%
- New Hampshire: 1.93%
- Vermont: 1.83%
- Connecticut: 1.79%
