Cities with the Lowest Real Estate Taxes

It was Benjamin Franklin that once said, “in this world, nothing can be said to be certain, except death and taxes.” Real estate tax – more commonly called property tax – is one certainty that homeowners face on an annual basis. How various locales determine property tax rates can be complicated, but the simplest explanation for homeowners is that it real estate tax amounts to a percentage of the assessed value of a real estate property. It is this tax that is often is a major contributor to municipal coffers. Cities, counties and states often use the revenue from these taxes to pay for services. The national average for real estate tax currently hovers around 1.15%. The state-wide range falls between a high of 2.35% in New Jersey to a low of 0.27% in Hawaii.

The tax rate varies by city and between urban and rural areas as well. Frequently – though certainly not always – property taxes are lower in cities where median home prices are higher and vice versa. There are, however, several other factors that affect this rate. These may include local sales tax rates and state income taxes. That said, when examining cities nationwide, the five lowest real estate tax rates belong to:

  • Boston, MA
  • Birmingham, AL
  • Denver, CO
  • Cheyenne, WY; and
  • Honolulu, HI

At the top of the scale for the five lowest real estate tax rates is Boston, MA. This city has a real estate tax rate of 0.67%, which means that homeowners here pay about $6.70 per $1000 of property value. The median home value in Boston is $544,600. Home values in this area are on the rise, but as home values have risen, the property tax rate has gone down.

Coming in at a slightly lower rate are the cities of Birmingham, AL and Denver, CO. Both have a property tax rates of 0.66%. That works out to about $6.60 per $1000 of property value. Since the rate is the same for both cities, and property taxes are based on the property value, residents of Denver will generally pay more property tax because the average home value in Denver is $383,200. In Birmingham, however, the median home value is $61,900.

Cheyenne, WY is lower still and boasts a real estate tax rate of 0.65%. The median home value in Cheyenne is $205,000 and values are on the increase. Cheyenne residents pay roughly $6.50 per $1000 of valuation.

Keeping in line with the state, Honolulu, HI has the lowest real estate property tax of any major city in the United States at just 0.30%. Residents pay roughly $3.00 per $1000 of property value in this tropical locale. Median home values here are high and on the rise with a median real estate value of $672,900. Though this is higher than the median in the other cities with low tax rates, it is far from the nation’s highest.

Real estate tax rates and property values can fluctuate from year to year with the market and policy changes. In addition, rates can vary depending on many factors including county and zoning. Still, for the lowest real estate tax rates, buyers should keep Bostin, Birmingham, Denver, Cheyenne and Honolulu in mind.