Everyone tries to reduce overall taxes, and with property taxes, federal income tax, state income tax, Social Security tax and sales taxes, there's a lot to reduce. Out of all these types of taxes, it's reported that a majority of people think of property taxes as the least fair tax.
Living in a state with low property taxes as a percentage of home value provides a low property tax burden for the taxpayer. However, low property taxes don’t necessarily mean that residents in these states bear low tax burdens overall. Some states offset low property taxes with higher taxes on income or consumption.
Hawaii has a property tax that equals 0.28% of average home values. The median home value in Hawaii is $500,000, and the median property taxes on that home are $1,389. However, the state has the second-highest income tax among states that have income taxes, which contributes to a high state tax burden overall. Leaders in Hawaii cite the overall burden as a contributing factor to higher prices and a harsh business environment.
Alabama has a property tax that is equal to 0.43% of average home values in the state. The median home value in Alabama is $122,700 and the median property taxes on a home are $532.
In 2012, Alabama collected the lowest in property taxes per person, and it continues to have a low overall tax burden per capita. The state has a sales tax roughly 2 percentage points below the national average of 5.95%, and it levies a personal income tax between 2 and 5%.
Louisiana has the third lowest property tax as a percentage of average home values, with a tax of 0.51%. The median property taxes on a home in Louisiana are $714 on a median home value of $140,300.
Louisiana also offers a property tax break known as the Restoration Tax Abatement, giving landowners a tax break based on the dollar value of property renovations. The state also has an income tax bracket that ranges from 2 to 6% and is subsidized by the federal government, allowing it to levy a low tax burden overall.
Delaware has a property tax equal to 0.55% of average home values within the state. The median value of a home in Delaware is $226,200 and the median property taxes are $1,240.
However, the state faces a tight budget and cites a property tax increase as one of the best available revenue sources for the state, since other tax revenues tend to be more volatile. Delaware homes are subject to county property taxes, school district property taxes and vocational school district taxes.
5. District of Columbia
The District of Columbia has a property tax equal to 0.57% of average home prices in the area. The median property taxes are $2,693 on a median home value of $470,500.
The District of Columbia isn't a state but, in fact, a state-local entity. If D.C. was a state, it would rank highest in the United States in state and federal tax collections per capita. In 2012, residents and businesses paid a combined $20.7 billion in federal taxes, which was more than 19 states in terms of the amount collected.
6. South Carolina
South Carolina is tied with the District of Columbia as having a property tax equal to 0.57% of average home values. The median home is valued at $139,200, and the property tax on those homes averages $788.
However, in 2012, it was reported that the state was $22.9 billion in debt, which equates to roughly $7,800 per taxpayer. This is a sign that South Carolina might increase taxes to reduce its deficit.
7. West Virginia
West Virginia has property taxes that equal 0.59% of its average home value. Median homes in the state are valued at $103,200 and residents pay an average of $605 in property taxes a year. West Virginia collected the seventh-lowest amount of property taxes per person in 2012, with an average of $773 in property taxes. However, it has an income tax between 3 and 6.5% and a sales tax that hovers around 6%.