Property tax is an annual tax based on your home's assessed value, with rates varying dramatically by location — from 0.27% in Hawaii to 2.47% in New Jersey. On a $350,000 home, that's $945/year to $8,645/year depending on where you live. You can lower your bill by appealing your assessment, claiming exemptions, and checking for errors.
Bottom line:
Key Takeaways
- Average U.S. property tax rate: approximately 1.1% of assessed value
- Rates vary 10x between lowest and highest states
- Homestead exemptions can reduce your assessed value by $25,000-$50,000+
- 40-60% of property tax appeals result in reduced assessments
- Always check your assessment for errors — incorrect square footage or features are common
Property tax = assessed value × tax
Property tax = assessed value × tax rate (mill rate). Your county assessor determines your home's assessed value (sometimes a percentage of market value), and local governments set the tax rate based on budget needs.
The assessed value may differ from market value — some states assess at 100% of market value, others at 50-80%. The tax rate (often expressed in mills, where 1 mill = $1 per $1,000 of assessed value) varies by municipality, school district, and county.
Highest property tax states
Highest property tax states: New Jersey (2.47%), Illinois (2.23%), Connecticut (2.15%), New Hampshire (2.09%), Vermont (1.90%). In these states, property taxes on a median-value home can exceed $8,000-$12,000/year.
Lowest property tax states: Hawaii (0.27%), Alabama (0.39%), Colorado (0.51%), Louisiana (0.53%), South Carolina (0.56%). Effective rates under 0.60% mean property taxes of $1,500-$2,500 on comparable homes.
Property taxes should be a major factor in relocation decisions, especially for retirees on fixed incomes.
Appeal your assessment
Appeal your assessment: If you believe your home is overvalued, file an appeal with your county assessor's office. Gather evidence: recent comparable sales, independent appraisal, or documentation of property issues. Studies show 40-60% of appeals result in reduced assessments.
Claim all exemptions: Most states offer homestead exemptions reducing assessed value by $25,000-$50,000. Additional exemptions may be available for seniors (65+), veterans, disabled individuals, and agricultural use.
Check for errors: Review your assessment for incorrect square footage, lot size, number of bedrooms/bathrooms, or features you don't have (finished basement, pool, etc.). Errors are surprisingly common.
Don't over-improve: Major renovations and additions increase your assessed value and, therefore, your tax bill. Factor property tax increases into renovation cost calculations.
Most mortgage lenders require property taxes to
Most mortgage lenders require property taxes to be paid through escrow — your monthly mortgage payment includes 1/12 of your annual property tax, held in an escrow account by the lender who pays the tax bill on your behalf. This prevents missed payments and ensures taxes stay current.
Review your escrow analysis annually. If your property tax decreases (through an appeal or exemption), your monthly escrow payment should decrease too. Request an adjustment if your lender doesn't update it automatically.
How We Evaluated
Effective tax rates from Tax Foundation and U.S. Census Bureau data. State rankings based on 2025-2026 published data.Frequently Asked Questions
Who is this guide designed for?
This guide is for anyone looking to improve their financial situation, from beginners to experienced individuals. We explain concepts clearly with actionable steps.
How much money do I need to get started?
Many strategies here require little or no upfront cost. Where money is needed, we note minimums and offer alternatives for different budgets.
How quickly will I see results?
Some strategies produce immediate benefits; others build wealth over months or years. We indicate the expected timeline for each recommendation.
Are there risks I should know about?
We highlight potential downsides throughout the article. No financial strategy is risk-free, but we focus on approaches with favorable risk-reward profiles.
Where can I learn more?
WalletGrower has an extensive library of guides, calculators, and comparison tools. Check related articles below or use our search tool to explore specific topics.
Editorial Disclosure: WalletGrower may earn a commission from partner links. Our editorial content is independent and not influenced by advertisers. We research products independently and only recommend what we believe in. Updated April 2026.