Lowest Property Tax States For Landlords

Lowest Property‑Tax States for Landlords (2026)

Property taxes are a recurring expense that directly affects a landlord’s cash flow and the overall profitability of rental investments. Unlike one‑time acquisition costs, the tax bill must be paid each year regardless of vacancy rates, rent levels, or maintenance expenses. Because the amount owed is tied to the assessed value of the property, states with lower effective property‑tax rates can reduce the ongoing cost base for owners of rental housing. The figures below are derived from the U.S. Census Bureau’s 2023 American Community Survey (5‑year estimates) and reflect the median home value and the corresponding estimated annual tax for each jurisdiction.

Table: Top 10 Lowest‑Tax States for Landlords

Rank	State	Avg. Effective Property Tax (%)	Median Home Value (USD)	Est. Annual Tax (USD)
1	Hawaii property tax	0.27%	$808,200	$2,183
2	Alabama property tax	0.38%	$195,100	$738
3	Nevada property tax	0.49%	$406,100	$1,970
4	Colorado property tax	0.49%	$502,200	$2,448
5	Puerto Rico property tax	0.50%	$124,600	$627
6	South Carolina property tax	0.51%	$236,700	$1,199
7	Arizona property tax	0.52%	$358,900	$1,858
8	Delaware property tax	0.53%	$326,800	$1,731
9	Utah property tax	0.53%	$455,000	$2,412
10	Idaho property tax	0.53%	$376,000	$2,006

According to U.S. Census Bureau data, the national average effective property‑tax rate is 0.97% with a median home value of $318,381 and a median annual tax of $2,993.

Context for Landlords

State	Implications for Rental Owners
Hawaii	Although the effective tax rate is the lowest in the nation (0.27 %), the median home value is the highest among the listed jurisdictions. The resulting annual tax ($2,183) is modest relative to property price, but acquisition costs remain a major consideration for investors.
Alabama	With a 0.38 % rate and a median home value of $195,100, the estimated tax ($738) is the smallest absolute amount in the list. Low taxes combined with relatively low home prices can improve net operating income for landlords.
Nevada	Nevada’s 0.49 % rate applied to a median value of $406,100 yields an annual tax of $1,970. The state’s lack of a personal‑income tax can further enhance overall tax efficiency for property owners.
Colorado	Sharing the 0.49 % rate, Colorado’s higher median home value ($502,200) produces a larger tax bill ($2,448). Landlords should weigh this against the state’s strong rental‑market demand in metropolitan areas such as Denver.
Puerto Rico	At a 0.50 % effective rate and a median home value of $124,600, the estimated tax ($627) is the lowest dollar amount. Puerto Rico also offers unique tax incentives for U.S. investors, though these are separate from property‑tax considerations.
South Carolina	The 0.51 % rate with a median home value of $236,700 results in an estimated $1,199 annual tax. The state’s relatively low taxes and growing coastal rental markets may be attractive for landlords targeting vacation or seasonal rentals.
Arizona	Arizona’s 0.52 % rate applied to a $358,900 median home value translates to $1,858 in annual taxes. The state’s population growth and expanding metropolitan areas (e.g., Phoenix) can offset the modest tax burden.
Delaware	With a 0.53 % rate and a median value of $326,800, the estimated tax is $1,731. Delaware’s corporate‑friendly environment and proximity to major Northeastern markets can make it a strategic location for multi‑state landlords.
Utah	Also at 0.53 %, Utah’s higher median home value ($455,000) yields an estimated tax of $2,412. The state’s strong job market and high renter demand, especially in the Salt Lake City corridor, help sustain rental yields.
Idaho	Idaho matches the 0.53 % rate with a median home value of $376,000, resulting in an estimated tax of $2,006. The state’s relatively low cost of living and increasing in‑migration contribute to steady rental demand.

How the Data Can Be Used

Cash‑flow modeling: Incorporating the estimated annual tax figure helps landlords produce more accurate pro‑forma statements.
Location analysis: When comparing potential investments, the effective tax rate provides a normalized metric that accounts for differing home values across states.
Portfolio diversification: Investors seeking to spread risk across jurisdictions may prioritize states with lower tax burdens to balance higher‑cost markets elsewhere.

Sources

U.S. Census Bureau, 2023 American Community Survey (5‑year estimates) – effective property‑tax rates, median home values, and derived annual tax estimates.

All figures are based on the most recent ACS estimates and reflect median residential properties; actual tax obligations for specific rental units may vary depending on local assessment practices and property‑specific characteristics.

Lowest Property Tax States For Landlords