Property Tax in the USA: A State-by-State Comparison for 2025

The property tax rates in the U.S. can vary, with Hawaii at just 0.27% and New Jersey at 2.33%. This difference can impact your annual expenses as a homeowner. Understanding these variations is important for financial planning.

This blog explores how property taxes are calculated, identifies states with the highest and lowest rates, and explores factors contributing to these variations. By the end, you'll have insights on how to navigate property taxation.

Property taxes are levies imposed by local governments based on the assessed value of real estate properties. The calculation involves two main components:

• Assessed Value: Local tax assessors determine this value, which may be a percentage of the property's market value.
• Tax Rate: Often referred to as the millage rate, it's the amount per $1,000 of assessed value that homeowners must pay.

For example, if a home is assessed at $200,000 and the local tax rate is 1%, the annual property tax would be $2,000.

The average effective property tax rate (percentage of home value paid annually) in the U.S. is 0.90% as of 2025. However, this varies widely:

• Hawaii: 0.27% ($2,309 annually on a $855,259 home)
• New Jersey: 2.33% ($9,345 annually on a $401,400 home)

Rates typically reflect a state’s reliance on property taxes versus other revenue sources like income or sales taxes.

As of 2025, No U.S. state eliminates property taxes, but five states have rates below 0.55%:

States with low property taxes compensate by generating revenue through other means like:

• Alternative Taxes: Higher sales or income taxes can offset lower property tax revenues.
• Natural Resources: States rich in natural resources, like oil or minerals, may use revenues from these industries to fund public services. This can reduce reliance on property taxes.
• Tourism: High tourism income can bring in a lot of money. This helps lower property taxes for residents.

For instance, Hawaii uses tourism-related taxes, while Alaska leverages oil revenues.

The following states have the highest property tax burdens:

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Several factors can cause higher property taxes:

• Public Services Funding: States that spend a lot on public services like education and infrastructure usually need higher property taxes to fund these efforts.
• Local Government Reliance: In some regions, local governments depend more on property taxes. This is due to limited alternative revenue sources.
• High Property Values: When property values go up, property tax bills also increase, even if the tax rate isn’t very high.

Property taxes have risen in recent years. They reflect higher home values and local government funding needs. In 2024, property taxes for single-family homes rose by 5.1% from last year. The median payment was $3,018.

Home price forecasts predict a 2%-3% rise by 2025, reaching record highs. This may lead to higher property taxes soon.

Given these trends, homeowners should anticipate ongoing annual property tax increases. The exact amount will vary based on local assessments and budgetary requirements.

Homeowners can try different strategies to manage and lower their property tax.

• Homestead Exemption: This lowers the taxable value of a primary home. It helps reduce property taxes for homeowners. Eligibility and exemption amounts vary by state and local jurisdiction.
• Senior Citizens Exemption: This exemption is for homeowners, usually 65 or older. It reduces the property's assessed value to provide tax relief. In New York, eligible seniors can get a 50% cut in their home's assessed value. This depends on their income and local rules.
• Veterans Exemption: This exemption honors military service by reducing property taxes for eligible veterans. The benefits can differ by state. Some provide a fixed dollar amount, while others give a percentage decrease in assessed value.
• Disability Exemption: Homeowners with qualifying disabilities may receive property tax relief through this exemption. In Illinois, the Homestead Exemption for Persons with Disabilities gives a $2,000 annual reduction in the EAV of a disabled person's primary, owned, and occupied residence.
• Low-Income Exemption: Some municipalities offer property tax exemptions to residents whose income falls below a specified threshold. For example, the city of Detroit provides varying tax exemptions based on household size and income. Households of two earning $24,000 receive a 100% exemption. Households of three with an income of $32,000 get a 25% exemption.

Predicting future property tax trends is challenging. While some states are exploring measures to cap or reduce property taxes, others may increase rates to meet budgetary needs.

Short-term relief is emerging in two states:

• Illinois: Expanded senior exemptions now cover 100% of taxes for households earning less than $75K.
• New Jersey: $2B “StayNJ” program cuts senior property taxes 50% by 2026.

In 2025, property tax rates vary across the United States, with Hawaii having the lowest rate at 0.27% and New Jersey among the highest. Understanding these variations is important for homeowners aiming to manage their expenses.

Buying a home is one of the biggest financial commitments most people make. In 2025, the median home price in the U.S. is over $400,000, requiring notable upfront costs, ongoing mortgage payments, and annual property taxes.

A 3% realtor commission on a $400,000 home adds $12,000 to your costs—money that comes directly from your savings. On top of that, homeowners must budget for annual property taxes, which can range from a few thousand dollars in low-tax states like Hawaii to over $9,000 per year in states like New Jersey. Add in mortgage payments, and the financial burden increases quickly.

By choosing reAlpha’s AI-powered, commission-free home-buying platform, you save that 3%, which could cover several years of property taxes or multiple mortgage payments. Instead of paying unnecessary fees, you can put that money toward reducing your homeownership costs and making financial planning easier.

Property taxes are typically calculated by multiplying the assessed value of a property by the local tax rate. Assessments are based on factors like property size, location, and market value.

Many jurisdictions offer exemptions, such as homestead exemptions for primary residences, senior citizen exemptions, or veterans' exemptions. Eligibility and benefits vary by location.

Failing to pay property taxes can result in penalties, interest charges, and eventually a tax lien or foreclosure on the property. It's crucial to pay taxes on time or seek assistance if you're unable to do so.

reAlpha revolutionizes home buying. It has a commission-free, AI-powered platform that streamlines the whole process. Their interface offers personalized property suggestions and virtual tours. It also manages documents, reducing paperwork. The AI system analyzes your preferences and budget to suggest fitting homes.

Save Big when you Buy a Home with reAlpha!

Discover how our all-in-one homebuying platform can increase your buying power and put money back in your pocket. Start your journey today!

Sign up for free