Hawaii is the #1 state with the lowest property taxes

Ask any homeowner about expenses and they’ll tell you: If you’re a first-time buyer, you need to carefully calculate the total cost of owning a home before taking the plunge into homeownership.

Owning a home comes with dozens of additional costs, from mortgage payments and interest to upkeep, renovations, and household utility bills. It doesn’t take long before expenses add up—especially when they come on top of potential property tax costs.

To determine which states offer the lowest in property taxes, Roofstock analyzed 2021 data from Wallethub and the U.S. Census Bureau. Costs were then determined for real estate property tax rates, median real estate tax payments, and median home prices for every state and Washington D.C. These amounts were then contextualized with what first-time homebuyers need to know about property taxes.

Hawaii by the numbers

- Effective real estate tax rate: 0.28%
- Annual taxes on $217.5k home: $606
- Hawaii's median home value: $615,300
- Annual taxes on Hawaii's median home: $1,715

The wondrous landscape of Hawaii may mean a higher median home value for homebuyers, but it doesn’t equate to a high rate of real estate taxes for homeowners in this state.

Hawaii's low property taxes are due to generous exemptions offered to certain types of homeowners. One of the main exemptions is geared toward homeowners with owner-occupied residences. Homeowners who occupy their residences full time—i.e., homeowners that have properties that are not secondary or vacation homes—are eligible for exemptions that range from $80,000 to $160,000, depending on the county of residence. Each county in Hawaii sets its own real estate tax rates, but in general, these exemptions can greatly decrease the cost of real estate taxes for homeowners anywhere in the state—at least when it comes to owner-occupied properties.

In some states, the high cost of property taxes can cause a home with an otherwise affordable price tag to be well out of someone’s price range. In others, the low cost of property taxes could give you a little more wiggle room in your budget—which is never a bad thing.

If the idea of weighing the estimated costs of property taxes seems overwhelming to you, start by looking at the states with the lowest property taxes listed below. The national list is reverse-ordered by effective real estate tax rate, with Hawaii as the state with the lowest property taxes, though the results would look different if it was ordered by the taxes on the state's median home. Whether you're looking for a dream home or next big investment, owning a home comes with several additional costs, property taxes being one of them.

States with the lowest property taxes

#1. Hawaii: 0.28% effective real estate tax rate
#2. Alabama: 0.41% effective real estate tax rate
#3. Colorado: 0.51% effective real estate tax rate
#4. Louisiana: 0.55% effective real estate tax rate
#5. Washington, D.C.: 0.56% effective real estate tax rate