Property taxes play a significant role in American households’ finances, with the average household spending $2,869 annually, according to a recent WalletHub report. These taxes impact not only homeowners but also renters, as they influence monthly rental rates and contribute to state and local government revenues. If you’re considering a move in retirement, particularly to maximize a fixed income, property taxes will become part of your deliberations.

Property Taxes Vary Widely Across the Country

We’ve been amazed when speaking to a friend in a state like Alabama, who pays 400 dollars per month toward property taxes each year. At the same time, some of us are paying several thousand dollars per year in other states. Clearly, property taxes vary a significant amount throughout the country.

WalletHub’s analysis, drawing on data from the U.S. Census Bureau, sheds light on the considerable variation in property taxes across different regions.

To determine where property taxes are highest and lowest, WalletHub compared rates across the 50 states and the District of Columbia. Using Census Bureau data, researchers calculated real estate property tax rates by dividing the median real estate tax payment by the median home price in each state. This methodology allowed them to quantify the dollar amount paid in real estate taxes on a home valued at the national median of $281,900.

Considering the price of a home is crucial in assessing total tax bills. WalletHub’s ranking of effective tax rates accounts for this by using the annual taxes paid on a home priced at the median value within each state.

Twelve States With the Lowest Property Taxes

For those seeking areas with lower property tax burdens, WalletHub’s analysis reveals the 12 states with the lowest property taxes: Alabama, Hawaii, Colorado, Nevada, South Carolina, West Virginia, Louisiana, Delaware, Utah, Arizona, Idaho, and the District of Columbia. The effective property tax rate in these states ranges from 0.27 percent in Hawaii up to 0.56 percent in Arizona, Idaho, and the District of Columbia.

By informing yourself about regional differences in property taxes, you can make more strategic decisions to optimize your financial well-being. If you’re considering a move in retirement or at any other time, let’s meet to discuss your long-term financial plan. We can help you anticipate the various implications of your move so that you can incorporate them into your budget.