Southwest, Hawaii rank low for property tax rates

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(The Center Square) - Southwestern states ranked among the lowest in the U.S. for property tax rates in a new report, giving homeowners some relief amid widespread housing affordability issues.

And the state with the best tax rate, according to the report?

Hawaii.

The report by WalletHub ranked all 50 states and Washington, D.C., by real estate and vehicle property tax rates. The findings provide cost-of-living information for potential inter-state movers. 

“Every penny counts,” WalletHub analyst Chip Lupo told The Center Square. “If you're looking at relocating, it's a good idea to not just focus on the home price, but take a look at how much your property taxes are going to be, because that's going to be part of the overall mortgage bill for the next 30 years of your life.”

In 2026, Hawaii had the lowest effective real-estate tax rate (0.27%), according to the WalletHub report. But with the highest median home value of any state ($839,100), the median annual property tax payment ($2,239) was not far off of the national average of $3,119.

The second-lowest property tax is in Alabama (0.38%), where below-average home values ($209,900) make the average person’s annual real-estate property taxes the lowest in the U.S. at $788.

On the opposite end of the spectrum, New Jersey (2.11%) and Illinois (2.01%) were the only states with property tax rates above 2%. These highest taxed states resulted in well-above-average annual property taxes for residents of $9,590 in New Jersey and $5,298 in Illinois.

“Taxes are always a hot button issue nationwide, regardless of what state you live in,” said Lupo. “You can view them either as just a minor irritant, or in some cases, depending where you live, a significant financial burden.”

Nevada (ranked third, 0.47%) has the lowest real-estate property tax rate of Southwestern states the continental U.S., followed by Arizona (fourth, 0.48%), Colorado (fourth, 0.48%), Utah (10, 0.52%), New Mexico (17th, 0.7%) and California (17th, 0.7%). 

All of the Southwestern states were in the lower-half of tax rates, despite above-average home values.

“There's hot real estate markets in these states too. The prices of homes are skyrocketing,” said Lupo. “For example, Colorado – Denver is a hot real estate market. A lot of people are getting priced out, with the average house price of a little over $539,000. It’s the same thing in Utah ($489,000), Idaho ($418,000), Nevada ($435,000), Arizona ($395,000). 

“You have these hot real estate markets, but they've been traditionally low tax,” Lupo added. “So yes, you're going to be shelling out probably some inflated prices for homes, but you have the benefit of a somewhat lower tax rate to offset that.”

Results were more mixed for property taxes on vehicles in the Southwest. Nevada (44th, 2.12%), Colorado (39th, 1.79%) and Arizona (38th, 1.68%) were among the most taxed states. California (28th, 0.65%) was beat out in the Southwest only by New Mexico and Utah, which joined the 22 other states and D.C. in not adding taxes to vehicles.

“About half the states will tax you property taxes on your vehicle,” said Lupo. “That can be a burden, particularly if you have multiple vehicles.”

Virginia (3.97%) had the highest vehicle property tax rate in the country. The average car owner there paid $1,156. The survey found the average vehicle property tax rate by comparing the nation’s most popular car in 2025, the $29,100 Toyota Camry.