3rd Sep 2026
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Property taxes are one of the highest ongoing costs of homeownership, and unlike your mortgage rate, they don't stay fixed. They can rise every year without any change to your loan, and how much you pay depends almost entirely on where you live.
On a $400,000 home, the gap between the highest and lowest-taxed states is more than $6,300 per year. That difference is large enough to change what you can afford to borrow meaningfully and where it makes sense to buy.
This guide ranks all 50 states by their 2026 effective property tax rate, explains how property taxes work and how they are calculated, covers the key federal tax change that affects homeowners this year, and walks through what buyers and owners need to know before making a decision based on tax costs alone.
What Is a Property Tax and How Is It Calculated?
Property taxes are annual levies charged by local governments, counties, cities, and townships, based on two inputs: a property's assessed value and the local millage rate. Assessed value is the government's estimate of your home's worth, often a percentage of market value.
The millage rate, expressed in dollars owed per $1,000 of assessed value, determines the share of that value you pay each year. The effective tax rate, taxes paid divided by actual market value, is the most accurate way to compare states, because assessment ratios differ widely across the country.
Two terms matter here and are easy to confuse. The nominal millage rate is what your jurisdiction publishes. The effective rate is what you actually pay as a percentage of your home's market value. They are not the same. A state can publish a millage rate of 30 mills but assess property at only 25% of market value, producing an effective rate of 0.75%. Another state assesses at 100% of market value with a 1% rate, producing a higher effective bill despite a lower published rate.
This is why all rankings in this guide use effective rates, taxes actually paid divided by market value, sourced from the Tax Foundation's 2026 property tax table, which draws on 2024 American Community Survey data from the U.S. Census Bureau. Comparing states on effective rates gives you an honest apples-to-apples picture. Comparing nominal millage rates gives you noise.
Your annual tax bill is calculated as: assessed value × millage rate. Most jurisdictions bill twice per year, a summer bill and a winter bill. When you carry a mortgage, your lender typically collects one-twelfth of your estimated annual tax every month as part of your escrow payment and pays the bill on your behalf when it comes due.
All 50 States Ranked by Effective Property Tax Rate (2026)
New Jersey and Illinois tie for the highest effective property tax rates nationally at 1.88%, according to the Tax Foundation's 2026 table based on 2024 Census data. Hawaii is the lowest at 0.29%. The national unweighted average across all 50 states is 0.90%. The Northeast and Midwest consistently post the highest rates; the South and Mountain West consistently post the lowest. On a $400,000 home, the spread between New Jersey and Hawaii is more than $6,300 per year.
|
Rank |
State |
Effective Rate (2026) |
Est. Annual Tax on $400K Home |
|---|---|---|---|
| 1 | New Jersey | 1.88% | $7,520 |
| 2 | Illinois | 1.88% | $7,520 |
| 3 | Connecticut | 1.54% | $6,160 |
| 4 | Vermont | 1.51% | $6,040 |
| 5 | New Hampshire | 1.50% | $6,000 |
| 6 | Nebraska | 1.44% | $5,760 |
| 7 | Texas | 1.40% | $5,600 |
| 8 | Ohio | 1.36% | $5,440 |
| 9 | Iowa | 1.33% | $5,320 |
| 10 | Wisconsin | 1.32% | $5,280 |
| 11 | New York | 1.30% | $5,200 |
| 12 | Pennsylvania | 1.26% | $5,040 |
| 13 | Kansas | 1.21% | $4,840 |
| 14 | Michigan | 1.19% | $4,760 |
| 15 | Rhode Island | 1.12% | $4,480 |
| 16 | Massachusetts | 1.00% | $4,000 |
| 17 | Minnesota | 1.00% | $4,000 |
| 18 | South Dakota | 1.00% | $4,000 |
| 19 | Maine | 0.98% | $3,920 |
| 20 | Alaska | 0.94% | $3,760 |
| 21 | Maryland | 0.92% | $3,680 |
| 22 | North Dakota | 0.92% | $3,680 |
| 23 | Missouri | 0.89% | $3,560 |
| 24 | Oregon | 0.81% | $3,240 |
| 25 | Georgia | 0.79% | $3,160 |
| 26 | Oklahoma | 0.79% | $3,160 |
| 27 | Florida | 0.78% | $3,120 |
| 28 | Virginia | 0.78% | $3,120 |
| 29 | Indiana | 0.76% | $3,040 |
| 30 | Washington | 0.75% | $3,000 |
| 31 | Kentucky | 0.74% | $2,960 |
| 32 | California | 0.70% | $2,800 |
| 33 | North Carolina | 0.66% | $2,640 |
| 34 | New Mexico | 0.63% | $2,520 |
| 35 | Montana | 0.61% | $2,440 |
| 36 | Mississippi | 0.58% | $2,320 |
| 37 | Arkansas | 0.56% | $2,240 |
| 38 | Louisiana | 0.55% | $2,200 |
| 39 | Delaware | 0.54% | $2,160 |
| 40 | Wyoming | 0.53% | $2,120 |
| 41 | Tennessee | 0.52% | $2,080 |
| 42 | West Virginia | 0.51% | $2,040 |
| 43 | Nevada | 0.50% | $2,000 |
| 44 | Colorado | 0.50% | $2,000 |
| 45 | Idaho | 0.50% | $2,000 |
| 46 | South Carolina | 0.49% | $1,960 |
| 47 | Arizona | 0.48% | $1,920 |
| 48 | Utah | 0.48% | $1,920 |
| 49 | Alabama | 0.37% | $1,480 |
| 50 | Hawaii | 0.29% | $1,160 |
Source: Tax Foundation, Property Taxes by State and County 2026 (2024 ACS data, U.S. Census Bureau). Annual tax estimates apply the statewide effective rate to a $400,000 home. County, city, and exemption variation will affect your actual bill; use statewide figures for location screening, not for underwriting.
What the Rankings Actually Mean: Rate vs. Real Bill
A low effective rate does not always produce a low tax bill. Hawaii anchors the bottom of the ranking at 0.29%, but on a median home value of over $800,000, the annual property tax still exceeds $2,400. California sits at 0.70%, below the national average, but applied to a statewide median home value near $790,000, the annual bill surpasses $5,500 in many markets. Rate and home value together determine your real cost. Either one in isolation is misleading.
The reverse is also true. Alabama ranks second lowest at 0.37%, and with a relatively modest median home value, most homeowners there pay under $1,000 per year, one of the lowest actual dollar amounts in the country.
The highest-taxed states also cluster for structural reasons. States without a broad income tax, Texas and New Hampshire are the clearest examples, rely far more heavily on property taxes to fund local government. Texas posts one of the highest effective rates in the country at 1.40%, despite having no state income tax. New Hampshire has no income or sales tax and funds most of its state and local services through property levies, producing a 1.50% effective rate. The tax always exists somewhere. The question is which form it takes.
High-cost states in the Northeast: New Jersey, Connecticut, and New York combine high property values with above-average rates, creating some of the largest absolute dollar bills in the country. New Jersey's $7,520 estimated annual tax on a $400,000 home exceeds what the same-value home would cost in 46 other states.
How Property Taxes Affect Your Mortgage Payment
Lenders collect property taxes monthly as part of your PITI payment, principal, interest, taxes, and insurance, and hold the funds in escrow. Higher taxes raise your PITI, reduce purchasing power at any given income level, and factor into debt-to-income calculations during underwriting. Two identical homes at the same purchase price in different states can produce monthly payments that differ by several hundred dollars, entirely because of the property tax component.
When you apply for a mortgage, your lender underwrites your debt-to-income ratio using your projected PITI payment, not just principal and interest. On a $400,000 home, the difference between New Jersey's $7,520 annual tax and Alabama's $1,480 is $6,040 per year, roughly $503 per month. That $503 adds directly to your monthly housing expense and reduces your qualifying capacity accordingly. At a 43% maximum DTI, a borrower earning $7,000 per month can carry approximately $3,010 in total monthly debt. A $503 difference in property taxes meaningfully changes how much mortgage they can support.
This is why the property tax rate of a specific county and municipality matters more during the homebuying process than the statewide average. The statewide number helps you screen markets. The county-level number, confirmed with a local assessor or your lender, is what actually goes into your escrow calculation.
If you are comparing two homes at similar prices in different markets, or evaluating a relocation from a low-tax state to a higher-tax state, running a full PITI calculation with the actual local tax rate gives you a realistic monthly cost of homeownership and payment figure before you make an offer, not after.
What Changed in 2026: The SALT Deduction Expansion
The One Big Beautiful Bill Act, signed in 2025, raised the federal SALT (State and Local Tax) deduction cap from $10,000 to $40,400 for the 2026 tax year. SALT includes state income taxes and property taxes.
Homeowners who itemize on Schedule A can now deduct up to $40,400 in combined state and local taxes, a significant increase from the $10,000 cap in place since 2018.
The elevated cap is temporary; it is scheduled to revert to $10,000 in 2030. A phaseout applies for modified adjusted gross incomes above $505,000.
For years, the $10,000 SALT cap penalised homeowners in high-tax states. A homeowner in New Jersey paying $9,000 in state income taxes and $7,500 in property taxes could deduct only $10,000 of their $16,500 in combined state and local taxes. The remaining $6,500 provided no federal tax benefit.
The One Big Beautiful Bill Act changes that for 2026 through 2029. For the 2026 tax year, the cap is $40,400 for single filers, heads of household, and married couples filing jointly (per Fidelity and TaxAct guidance, sourced from the OBBBA legislation). This allows homeowners in high-tax states to deduct a substantially larger share of their actual state and local tax burden, restoring meaningful federal tax value to homeownership in markets where property taxes alone exceed $10,000.
Two important limitations to know:
- To claim the SALT deduction at all, you must itemize on Schedule A. The 2026 standard deduction is $32,200 for married couples filing jointly and $16,100 for single filers. Your total itemized deductions — SALT, mortgage interest, charitable contributions, and any qualifying PMI premiums — must exceed those thresholds for itemizing to make financial sense.
- The elevated cap phases out for MAGI above $505,000 ($252,500 for married individuals filing separately). At incomes above those levels, the deduction reduces by 30 cents for each dollar of income over the threshold, with a floor of $10,000.
The practical implication: homeowners in states like New Jersey, Connecticut, Illinois, and New York, who were most harmed by the $10,000 cap, stand to gain the most from the 2026 change. If your combined state income and property taxes exceed $10,000 and you are below the income phaseout, itemizing in 2026 is likely worth a detailed conversation with your tax advisor.
How to Lower Your Property Tax Bill
There are three practical ways to reduce what you owe, and none of them require moving to a different state.
1. Request a Reassessment: Your property's assessed value drives your tax bill. If your home has been valued higher than comparable recent sales in your neighborhood suggest is warranted, you can request a reassessment. The formal process is an appeal to your local Board of Review or equivalent body. Your strongest evidence is a set of comparable sales: homes similar in size, age, and condition that sold recently for less than your assessed value implies. Success rates on property tax appeals run 30–40% in many jurisdictions, according to multiple state tax authority estimates. Review your assessment annually when the notice arrives, not just when you first buy.
2. Apply for Every Exemption you Qualify for. Most states offer homestead exemptions for primary residences, reducing assessed value or removing a portion of the tax bill for owner-occupants. Additional programs exist in most states for senior citizens, disabled veterans, and low-income households. These exemptions are not automatic in most jurisdictions; they require an application. Common exemptions include primary residence or homestead reductions, senior and disability credits, and disabled veteran full exemptions, which in many states entirely eliminate the property tax bill for qualifying veterans. Check with your county or local assessor's office for the specific programs available in your area.
3. Understand How Your Home's Sale Resets Your Tax Position: In states with assessment caps, California (Proposition 13 caps increases at 2% per year), Oregon, Michigan, and others, long-term homeowners can carry Taxable Values significantly below market value. When a home sells, those caps typically reset to the purchase price. A buyer purchasing a home where the previous owner had benefited from years of capped assessments may find their first year's tax bill notably higher than the seller was paying. This is worth factoring into your offer and your budget before closing.
Putting It Together Before You Buy
Property tax is one of the clearest examples of where the sticker price and the real cost of homeownership diverge. A home listed at $350,000 in Texas carries a meaningfully different monthly cost than a home listed at $350,000 in Arizona, not because of anything about the home itself, but because of the property tax environment in each state.
The buyers who are best positioned going into a purchase are the ones who run a full PITI calculation, principal, interest, taxes, and insurance, before they fall in love with a home. That calculation requires a specific county-level tax rate, not a state average. Your lender can help you build that number before you make an offer.
Sistar Mortgage is licensed in 41 states. Whether you are buying in a high-tax market and want to understand exactly how property taxes affect your qualifying income, or evaluating markets across state lines as a relocating buyer, our loan officers work through the full monthly cost picture with you, taxes included.
Frequently Asked Questions
1. Which state has the highest property tax rate in 2026?
New Jersey and Illinois tie for the highest effective property tax rates in the country at 1.88% each, according to the Tax Foundation's 2026 property tax table based on 2024 Census American Community Survey data. On a $400,000 home, that translates to approximately $7,520 per year, or about $627 added to your monthly mortgage payment through escrow.
2. Which state has the lowest property tax rate in 2026?
Hawaii has the lowest effective property tax rate at 0.29%, followed by Alabama at 0.37%. Both states illustrate an important caveat: rate and bill are not the same thing. Hawaii's low rate applied to a very high median home value still produces a meaningful annual dollar amount, while Alabama's low rate on a modest median home value produces one of the smallest actual tax bills in the country.
3. Are property taxes included in my monthly mortgage payment?
In most cases, yes. Most lenders collect property taxes monthly as part of your PITI payment and hold the funds in an escrow account, paying your tax bill on your behalf when it comes due. Your monthly escrow contribution is based on the lender's estimate of your annual tax bill, which is recalculated when your assessment changes, typically resulting in an escrow adjustment each year.
4. What is the average property tax rate in the US in 2026?
The national unweighted average effective property tax rate across all 50 states is 0.90% in 2026, per the Tax Foundation. Rates range from Hawaii's 0.29% at the low end to New Jersey and Illinois at 1.88% at the high end. Your actual rate depends on your specific county and municipality, not the state average.
5. What is the SALT deduction cap for 2026?
For tax year 2026, the SALT deduction cap is $40,400 for most filers under the One Big Beautiful Bill Act, up from the $10,000 cap in place since 2018. This allows homeowners who itemize on Schedule A to deduct up to $40,400 in combined state income and property taxes. The cap phases out for MAGI above $505,000. It is scheduled to revert to $10,000 in 2030. Consult a CPA to determine whether itemizing makes sense for your specific situation.
6. How can I lower my property tax bill?
Three proven strategies: appeal your assessment if your home has been overvalued relative to comparable sales in your area, apply for every exemption you qualify for (homestead, senior, veteran, and disability programs exist in most states and must be applied for; they don't apply automatically), and review your assessment annually when the notice arrives rather than only when you first buy. Success rates on formal property tax appeals run 30–40% in many jurisdictions.
