Alabama has historically assessed one of the lowest average property tax rates in the country. They make up this lost revenue with other income streams, but the low property tax rates still have an impact on the state's education system.

How Alabama Property Taxes Compare to the National Average

Alabama’s 2016 effective property tax rate is 0.43%. This is the second-lowest property tax rate in the United States, with Hawaii claiming the lowest rate at 0.28%. In 2016, Alabama’s median property tax assessment was 0.33%, which was also second-lowest in the nation. The state's average property tax assessment reflects 0.78% of the average individual’s income, making this yet another second-lowest rate in the nation. Finally, the state's average property tax assessment is 0.33% of the property’s value, which is the third-lowest ratio in the nation. In 2014, Alabama’s average property tax per capita was the lowest in the United States.

Counties in Alabama With Highest and Lowest Property Taxes

Jefferson County has the highest effective property tax rate in Alabama. In 2016, the average property tax rate was 0.63%. Mobile County and Lee County were second and third, with average rates of 0.54 and 0.53%, respectively. However, none of these counties paid the highest median property tax. In 2016, Shelby County has assessed an effective property tax rate of 0.50%. Because this county had the highest median home value in Alabama, the median property tax payment was $959.

As of 2016, Bibb County had the lowest average effective rate at only 0.27%, followed by Elmore County. However, the lowest median annual property tax payment came from Lamar County, where the average effective property tax rate was 0.30%. Additionally, with a median home value of only $66,800, the county's median annual property tax payment was $200.

How Alabama Property Taxes Compare to Neighboring States

Alabama’s neighboring states to the north and west have relatively similar property tax levies. As of 2016, Tennessee implemented a property tax assessment of 0.75%, which was the 13th-lowest rate in the nation. Mississippi had the 15th-lowest average effective property tax rate at 0.78%. However, Alabama’s neighbors with a coastline tend to have higher property tax rates. Georgia’s effective rate in 2016 was 0.96%, while Florida had an effective rate of 1.1%. These two states had the 25th- and 30th-highest rates in the nation, respectively. Therefore, while Alabama residents enjoy lower property tax levies than nearby states, the general southeast region of the United States does not average high property tax rates relative to the rest of the nation.

The Reason Why Property Taxes Are Low in Alabama

Alabama is able to assess such a low average property tax rate due to its high sales tax rate. Its 2015 rate of 8.91% was the third-highest in the country, behind Tennessee and Arkansas. In addition to the high rate, Alabama is unlike most states in that it applies the full sales tax rate to groceries and over-the-counter medicine. In 2015, the state was tied with Louisiana for the highest average local sales tax rate of 4.91%.

Another factor to consider is Alabama’s education system. WalletHub ranked its school system 39th in the country. The state had the second-lowest math test scores in the nation, and it was also ranked as the third-to-last state for the safest schools. In 2015, it spent the ninth-lowest amount of money on its education system, and the impact of this is evident in test scores and student well-being. Thus, Alabama is able to assess low property taxes on residents because it spends much less on its public education system than many other states.

Arkansas Property Tax Guide

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