As a property owner in the U.S, property tax is one of the largest ongoing tax expense. However, these taxes are not a fixed amount. They depend on two key factors for property and homeowners:
- The assessed value of the property
- The property tax rate of the county (or area)
These two factors can vary annually based on decisions by your local government, meaning property taxes can differ significantly for someone living in Texas versus Arizona, even if they own a similar property. Unfortunately, property owners have limited control over these taxes, and the risk of an unfair property assessment always exists.
However, you can always protest your property tax if you suspect an incorrect evaluation.
The U.S. state with the lowest property tax
Hawaii has long held the distinction of having the lowest property tax in the U.S., with rates ranging from 0.25% to 0.56% of a property’s assessed value. Even at the higher end of 0.56%, a property worth $100,000 would incur just $560 in property taxes annually!
Setting a low property tax rate is not a recent trend in Hawaii; the state's tax structure has always been designed to be property-owner friendly. Some reasons for this could be the state's reliance on significant tourism revenue, the low cost of living, and a relatively small population.
While Hawaii takes the crown for the lowest property tax bracket, there are other states in the U.S. that also offer low property tax rates for their residents.
Top U.S. states with the lowest property tax rates
According to WalletHub, a leading personal finance company, here are the states with property tax rates below 1%:
While the above states enjoy low property tax rates, there are also some states with higher rates that allow significant exemptions or low property tax rates for senior citizens and disabled veterans.
The U.S. states with the lowest property tax rates or 100% exemptions for seniors and disabled veterans
- Alabama
This is one of the few states that offers a full exemption for seniors, retired people over 65, and people with a 100% disability rating.
- Alaska
In Alaska, veterans over 65 or with a disability rating of 50% or more are eligible for tax exemption for the first $150,000 of their property's value, and the exemption can be transferred to their spouse if the veteran passes away and the spouse is at least 60 years old. Apart from this, Alaska also offers some financial aid to its residents, which helps lower the economic burden of any additional taxes they must pay.
- Florida
While resident veterans with 100% disability ratings may receive a full exemption for their property tax bill, those with a minimum 10% disability rating are still eligible for a $5,000 deduction.
- Georgia
Veteran residents over the age of 65 may claim a $4,000 exemption if the income of that person and his spouse does not exceed $10,000 for the prior year. Any qualifying disabled veteran may be granted an exemption of up to $109,986.
- Mississippi
Those over 65 or older or have a disability could qualify for an ad valorem tax exemption on up to $7,500 of your property’s assessed value. Additionally, an honorably discharged person with a service-connected total disability is eligible for exemption on all property taxes on the assessed value of their homestead property. Surviving spouses (who haven’t remarried) of eligible veterans may also qualify for this exemption.
- South Dakota
South Dakota has some interesting property tax relief policies compared with other states. Low-income households can reduce or freeze their property taxes. Apart from this, permanently disabled veterans may be eligible for an exemption on their property up to $150,00, and paraplegic veterans can avail of full property tax exemption.
The tax season is fast approaching, and no one wants to deal with last-minute chaos, so if you're ready to reduce your property tax bill this year, join your fellow Texans and pay fair with Bezit.