Introduction: Why Low Property Taxes Matter in 2025
As home prices and living costs continue to rise across the U.S., property taxes play a crucial role in overall housing affordability. For buyers, investors, and retirees, choosing a state with low real estate taxes can mean significant savings year after year. While no state is completely property tax-free, several offer exceptionally low effective rates, making them attractive destinations for those seeking to minimize ongoing homeownership expenses. Here’s a look at the top 10 states with the lowest property tax burdens in 2025, along with key stats and what makes each state appealing.
What Is Property Tax and Why Does It Matter?
Property tax is an annual charge based on the assessed value of your home, levied by local governments to fund schools, emergency services, and infrastructure. Unlike one-time closing costs, property taxes are recurring expenses that can add thousands of dollars to your yearly budget. States with lower rates offer relief to homeowners and real estate investors, improving cash flow and long-term affordability.
Top 10 States with No Property Tax or the Lowest Real Estate Taxes in 2025
1. Hawaii
- Effective Property Tax Rate: 0.27% (lowest in the U.S.)
- Median Home Value: $764,800
- Average Annual Property Tax: About $2,054
Hawaii boasts the lowest property tax rate in the nation. While home values are high, the low rate keeps annual tax bills moderate compared to other states with similar property values.
2. Alabama
- Effective Property Tax Rate: 0.38%–0.42%
- Median Home Value: $179,400–$225,539
- Average Annual Property Tax: $646–$944
Alabama combines low property tax rates with some of the country’s most affordable home prices, resulting in the lowest average property tax bills for homeowners.
3. Colorado
- Effective Property Tax Rate: 0.49%
- Median Home Value: $465,900–$546,004
- Average Annual Property Tax: $2,278–$2,675
Colorado’s property tax rate is among the lowest, and while home values are higher than the national average, the overall tax burden remains modest.
4. Nevada
- Effective Property Tax Rate: 0.49%–0.50%
- Median Home Value: $373,800–$446,700
- Average Annual Property Tax: $1,884
Nevada’s low property tax rate, combined with no state income tax, makes it especially attractive for both residents and investors.
5. South Carolina
- Effective Property Tax Rate: 0.51%–0.53%
- Median Home Value: $216,200–$320,000
- Average Annual Property Tax: $1,138
South Carolina offers generous exemptions for owner-occupied homes and retirees, making it popular with families and those seeking a lower cost of living.
6. Louisiana
- Effective Property Tax Rate: 0.55%
- Median Home Value: $198,300
- Average Annual Property Tax: $1,087
Louisiana features low property taxes and affordable home values, providing additional relief for homeowners.
7. Utah
- Effective Property Tax Rate: 0.55%–0.60%
- Median Home Value: $408,500–$500,000
- Average Annual Property Tax: $2,241
Utah’s strong economy and family-friendly communities are complemented by low property taxes relative to home values.
8. Delaware
- Effective Property Tax Rate: 0.43%–0.55%
- Median Home Value: $305,200–$350,000
- Average Annual Property Tax: $1,674
Delaware offers low property taxes, no state sales tax, and proximity to major metro areas, making it a favorite for retirees and commuters.
9. Arizona
- Effective Property Tax Rate: 0.41%–0.56%
- Median Home Value: $321,400–$424,841
- Average Annual Property Tax: $1,741–$1,786
Arizona’s property tax rate is among the lowest nationally, and its growing job market and sunny climate attract both young professionals and retirees.
10. Tennessee
- Effective Property Tax Rate: 0.44%–0.58%
- Median Home Value: $232,100–$340,000
- Average Annual Property Tax: $1,356
Tennessee combines no state income tax with low property taxes and a strong job market, appealing to a wide range of homebuyers.
Key Takeaways and Trends
- No state is completely property tax-free, but these 10 states offer the lowest effective rates in the nation.
- Hawaii has the lowest rate, but high home values mean annual tax bills are moderate.
- Alabama stands out for the lowest actual tax bills due to low rates and low home prices.
- States like Nevada and Tennessee are doubly attractive due to the absence of state income tax.
- Property taxes can vary by county or city, so always check local rates before buying.
Tips for Buyers and Investors
- Always research both state and local property tax rates before purchasing.
- Consider exemptions for seniors, veterans, and primary residences that can further reduce your tax bill.
- Factor in other state taxes (income, sales) to get a true picture of the cost of living.
- Consult a local real estate professional or tax advisor for the most accurate and up-to-date information.
Frequently Asked Questions
Is there any state with zero property tax?
No. All states levy some form of property tax, but these 10 have the lowest effective rates.
Why are property taxes so low in these states?
Many rely on other revenue sources or have lower public spending, allowing them to keep property taxes low.
Are low property tax states always the best for retirees?
Not always. Consider healthcare, climate, and total cost of living along with taxes.
Can property taxes change after I buy a home?
Yes. Rates and home values can rise, affecting your annual tax bill.
Conclusion
While no state is completely free of property taxes, Hawaii, Alabama, Colorado, Nevada, South Carolina, Louisiana, Utah, Delaware, Arizona, and Tennessee offer some of the lowest effective rates in the nation. For buyers, retirees, and investors, these states provide opportunities for lower ongoing costs and improved affordability. Always consider the full tax landscape and local trends before making your move—low property taxes can be a key factor in your financial planning for 2025 and beyond.