Introduction: Why Low Property Taxes Matter in 2025
As home prices and living costs continue to climb across the U.S., property taxes remain a crucial factor for homebuyers, investors, and retirees seeking long-term affordability. Property tax is an ongoing annual expense that can significantly impact your total cost of homeownership. In 2025, with many states reassessing tax policies and some regions seeing double-digit home value increases, choosing a state with low real estate taxes can save you thousands each year. This guide highlights the 10 U.S. states with no property tax (noting the reality: all states have some form of property tax) or exceptionally low effective rates, along with key stats, pros and cons, and what makes each state attractive for buyers and investors.
What Is Property Tax and Why Is It Important?
Property tax is a recurring fee assessed by local governments based on your property’s value. It funds essential services like schools, emergency response, and infrastructure. Unlike one-time closing costs, property taxes are ongoing—typically billed annually or semi-annually—making them a major consideration for anyone buying a home or investment property. High property taxes can add thousands to your yearly expenses, while low-tax states offer relief and improved cash flow for both homeowners and landlords.
Quick Facts: U.S. Property Tax Landscape in 2025
- No state is truly property tax-free; all 50 states levy some form of property tax, usually at the county or municipal level.
- The national average effective property tax rate in 2025 is approximately 0.99% of home value.
- States with the highest property taxes include New Jersey, Illinois, and Connecticut, with rates above 2%.
- The lowest property tax states include Hawaii, Alabama, Colorado, Nevada, South Carolina, Arizona, Delaware, Idaho, Tennessee, and Utah, all below 0.55%.
The 10 States with No Property Tax or the Lowest Real Estate Taxes in 2025
Below are the top states for property tax relief, with effective rates, median home prices, and unique advantages:
Hawaii
Effective Property Tax Rate: 0.27% (lowest in the U.S.)
Median Home Value: High (often $700,000+)
Why It’s Attractive: Despite high home prices, annual property tax bills are among the lowest nationwide. Ideal for retirees and luxury buyers seeking tax relief.
Best For: High-net-worth buyers, retirees, and those seeking a tropical lifestyle.
Alabama
Effective Property Tax Rate: 0.39%
Median Home Value: Approximately $220,000
Why It’s Attractive: Low property taxes and affordable homes make Alabama a haven for first-time buyers and retirees.
Best For: Budget-conscious buyers, families, and retirees.
Colorado
Effective Property Tax Rate: 0.49%
Median Home Value: Approximately $540,000
Why It’s Attractive: Property tax caps and a booming job market. No tax on Social Security benefits, making it popular with retirees and remote workers.
Best For: Outdoor enthusiasts, retirees, and tech professionals.
Nevada
Effective Property Tax Rate: 0.50%
Median Home Value: Approximately $446,700
Why It’s Attractive: No state income tax, low property taxes, and a vibrant job market in Las Vegas and Reno.
Best For: Investors, remote workers, and those seeking tax-friendly living.
South Carolina
Effective Property Tax Rate: 0.53%
Median Home Value: Approximately $320,000
Why It’s Attractive: Generous exemptions for owner-occupied homes and retirees, plus a mild climate and growing economy.
Best For: Retirees, families, and beach lovers.
Arizona
Effective Property Tax Rate: 0.41%
Median Home Value: Approximately $420,000
Why It’s Attractive: Low property taxes, strong job growth, and affordable living in cities like Phoenix and Tucson.
Best For: Young professionals, investors, and retirees.
Delaware
Effective Property Tax Rate: 0.43%
Median Home Value: Approximately $350,000
Why It’s Attractive: No state sales tax, low property taxes, and proximity to major metro areas.
Best For: Retirees, commuters, and families seeking affordability.
Idaho
Effective Property Tax Rate: 0.63%
Median Home Value: Approximately $410,000
Why It’s Attractive: Affordable living, low taxes, and booming tech and outdoor recreation sectors.
Best For: Outdoor lovers, remote workers, and families.
Tennessee
Effective Property Tax Rate: 0.48%
Median Home Value: Approximately $340,000
Why It’s Attractive: No state income tax, low property taxes, and a strong job market. Popular for retirees and families.
Best For: Retirees, families, and business owners.
Utah
Effective Property Tax Rate: 0.60%
Median Home Value: Approximately $500,000
Why It’s Attractive: Strong economy, family-friendly communities, and low property taxes relative to home values.
Best For: Families, tech workers, and outdoor enthusiasts.
Pros and Cons of Low Property Tax States
Pros:
- Lower ongoing homeownership costs
- More affordable for retirees and fixed-income households
- Higher cash flow for rental property investors
- Attractive for relocation and remote work
Cons:
- Some states offset low property taxes with higher sales or income taxes
- Fewer public services or amenities in certain areas
- High home prices in some low-tax states (such as Hawaii and Colorado)
Key Stats and Trends for 2025
- Hawaii’s average annual property tax bill is around $1,406, despite high home values.
- Alabama’s average annual property tax bill is about $895.
- Nevada’s average annual property tax bill is about $1,889.
- Delaware’s average annual property tax bill is about $1,635.
- States with no state income tax include Nevada, Tennessee, Texas, Florida, Alaska, Washington, South Dakota, Wyoming, and New Hampshire. Some of these have higher property or sales taxes to compensate.
- No state is truly property tax-free, but these 10 states come impressively close with rates well below the national average.
Tips for Homebuyers and Investors
- Research the full tax picture, including sales, income, and estate taxes in addition to property taxes.
- Check for exemptions, as many states offer property tax relief for seniors, veterans, and primary residences.
- Factor in local rates, since property taxes can vary widely within a state. Always check rates by county or city.
- Look at long-term trends, as some low-tax states are seeing rapid home price appreciation, which could impact future tax bills.
- Consult a tax advisor, especially if you’re relocating or investing from out of state.
Frequently Asked Questions
Is there any state with zero property tax?
No. Every U.S. state levies some form of property tax, but some have such low rates or generous exemptions that the burden is minimal.
Why are property taxes lower in some states?
States with alternative revenue sources, like tourism or natural resources, or lower public spending can afford to keep property taxes low.
Are low property tax states always the best for retirees?
Not always. Consider healthcare, climate, and overall cost of living in addition to taxes.
Can property taxes change after I buy a home?
Yes. Tax rates and assessed values can increase, especially in fast-growing markets.
How do property taxes affect renters?
Landlords often pass property tax costs on to tenants through higher rent, so low-tax states can benefit renters as well.
Conclusion: Where to Find the Best Property Tax Relief in 2025
While no state is completely free of property taxes, Hawaii, Alabama, Colorado, Nevada, South Carolina, Arizona, Delaware, Idaho, Tennessee, and Utah offer some of the lowest effective rates in the nation. For homebuyers, retirees, and investors, these states provide rare opportunities to minimize ongoing costs and maximize affordability. Always consider the full tax landscape and local market trends before making your move—low property taxes can be a game-changer for your financial future.