Lowest Property Tax States For Retirees

Lowest Property‑Tax States for Retirees

Why property tax matters for retirees
For many retirees, housing costs represent the largest single expense after they have paid off a mortgage. Because Social Security and other fixed‑income sources do not increase with inflation, a high property‑tax bill can quickly erode disposable income. Lower effective property‑tax rates therefore help retirees stretch their retirement savings, reduce the need for supplemental cash flow, and make it easier to remain in a home they own.

The figures below are based on the U.S. Census Bureau’s 2023 American Community Survey (5‑year estimates). The national average effective property‑tax rate is 0.97 %, with a median home value of $318,381 and a median annual property tax of $2,993. The ten jurisdictions listed have the lowest effective rates among all U.S. states and territories, which can be especially relevant for retirees who own their homes outright.

Comparison Table

All values are drawn from the 2023 ACS 5‑year estimates. “Effective property‑tax rate” is the median tax paid divided by the median home value.

Context for Retirees

Hawaii (Rank 1)

Hawaii’s effective rate of 0.27 % is the lowest in the nation, but the median home value is $808,200, well above the national median. For retirees who already own a home, the resulting annual tax of roughly $2,183 is modest. However, prospective retirees should consider the high purchase price and the cost of living when evaluating overall affordability.

Alabama (Rank 2)

Alabama combines a low rate (0.38 %) with a relatively low median home value ($195,100). The estimated tax of $738 per year can be especially advantageous for retirees on fixed incomes, and the lower home‑price level may also reduce the upfront capital required to purchase a residence.

Nevada (Rank 3)

Nevada’s 0.49 % rate and median home value of $406,100 result in an annual tax of about $1,970. The state has no personal income tax, which can further reduce the tax burden for retirees, though this article focuses solely on property taxes.

Colorado (Rank 4)

Colorado matches Nevada’s rate (0.49 %) but has a higher median home value ($502,200), leading to an estimated tax of $2,448. Retirees who value outdoor recreation and a relatively high quality‑of‑life environment may find the tax level acceptable relative to the amenities.

Puerto Rico (Rank 5)

With an effective rate of 0.50 % and a median home value of $124,600, Puerto Rico’s estimated annual property tax is only $627. The territory’s tax structure also includes other incentives for U.S. retirees, but those are outside the scope of this property‑tax comparison.

South Carolina (Rank 6)

South Carolina’s rate (0.51 %) and median home value ($236,700) produce an estimated tax of $1,199. The state offers a homestead exemption for seniors that can further lower the taxable assessment, providing additional relief beyond the baseline rate.

Arizona (Rank 7)

Arizona’s effective rate (0.52 %) with a median home value of $358,900 translates to an estimated annual tax of $1,858. The warm climate and a growing retiree community make the tax level a factor among many considerations.

Delaware (Rank 8)

Delaware’s 0.53 % rate and median home value of $326,800 give an estimated tax of $1,731. The state does not levy a sales tax, which can offset the higher property‑tax cost for some retirees.

Utah (Rank 9)

Utah’s effective rate (0.53 %) combined with a median home value of $455,000 results in an estimated annual tax of $2,412. The state’s low overall tax burden and high life expectancy are often cited in retirement planning.

Idaho (Rank 10)

Idaho also has an effective rate of 0.53 %, with a median home value of $376,000 and an estimated tax of $2,006. The state’s relatively low cost of living and natural scenery make it a frequent choice for retirees seeking affordability.

How to Use This Information

• Current homeowners can compare their existing tax bill to the estimates above to gauge whether a relocation might reduce expenses.
• Prospective retirees should weigh the effective property‑tax rate together with median home prices, cost‑of‑living indices, and other tax considerations (e.g., income‑tax rates, sales taxes).
• Financial planners may incorporate these rates into cash‑flow projections for clients who plan to purchase a primary residence in retirement.

Sources

• U.S. Census Bureau, 2023 American Community Survey (5‑year estimates) – property‑tax rates, median home values, and estimated annual taxes.
• Calculations are derived by multiplying the median home value by the average effective property‑tax rate for each jurisdiction.

All data are presented as of the 2023 ACS release; rates and home values may change in subsequent years.