Compare State Taxes: Side-by-Side for Homebuyers

Homeowners pay property taxes (assessed annually by your county), state income tax (if applicable), and sales tax on purchases. Some states also charge transfer taxes when you buy or sell. These taxes combined make up your total state tax burden and can vary dramatically depending on where you live.

Nine states have no state income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming. However, some of these states compensate with higher property taxes or sales taxes. New Hampshire and Washington tax certain investment income or capital gains.

Hawaii has the lowest effective property tax rate at around 0.29%, followed by Alabama (0.41%), Colorado (0.51%), and Louisiana (0.55%). However, low property tax rates can be offset by higher home values, so the dollar amount you pay may still be significant in expensive markets.

A homestead exemption reduces the taxable value of your primary residence for property tax purposes. The amount varies by state. Texas offers one of the most generous exemptions at $100,000 off the assessed value for school district taxes. Florida caps assessed value increases at 3% per year. Some states offer additional exemptions for seniors, veterans, and disabled homeowners.

Your total state tax burden directly affects how much house you can afford. A state with no income tax but high property taxes may benefit high earners but cost homeowners more annually. When comparing states, look at the total picture: income tax, property tax, sales tax, and any transfer taxes at purchase. A difference of 2-3% in total tax burden can amount to thousands of dollars per year.