How rental property tax rates vary by state in 2026

Rental property tax by state varies more than almost any other operating expense. It cuts your cash flow dollar for dollar, and it is one of the few costs you can estimate before you make an offer, subject to reassessment and local-rate changes. Measured as effective tax as a percentage of value, statewide owner-occupied rates run from 0.31% in Hawaii to 1.79% in Illinois, a spread of nearly six to one. Zoom into what rentals actually pay in each state's largest city and the gap widens past eleven to one, from 0.33% in Honolulu to 3.70% in Detroit. Most published tables measure owner-occupied homes, and rentals in many states pay more, so underwrite to the effective rate you will pay after closing, not the number on the seller's bill.

Property tax is a separate but interlocking calculation that feeds directly into the buy-versus-rent picture. A low price-to-rent ratio by state can look attractive on paper, but a 2% effective tax rate materially changes the real economics. What reads as a strong buy market can flip once you layer that cost on top. Run both numbers together before you commit to a market.

Rental property tax by state: 50-state ranked comparison

The 50-state table below pairs two current sources. The owner-occupied column comes from the Tax Foundation's Facts & Figures 2026, which measures 2024 taxes paid as a share of home value on owner-occupied housing. The rental column comes from the Lincoln Institute and Minnesota Center for Fiscal Excellence 50-State Property Tax Comparison for 2025, which models the effective rate on a $600,000 apartment in the largest city of each state. Read the owner-occupied figure as your statewide benchmark and the rental figure as a real-world check on what non-owner-occupied property actually pays, then adjust for the local classifications and lost exemptions in the caveat column. The ranking runs lowest owner-occupied rate first. For dollar context, ATTOM analysts report a 2025 average single-family bill of $4,427 nationally, and the national median tax bill for owner-occupied units was $3,211 in 2024.

• State | Owner-occupied rate (2024) | Rental rate, largest city (2025) | Investor caveat
• Hawaii | 0.31% | 0.33% (Honolulu) | Honolulu taxes transient vacation rentals at $9.00–$11.50 per $1,000 vs. $3.50 standard residential
• Alabama | 0.37% | 1.02% (Huntsville) | -
• Arizona | 0.43% | 1.12% (Phoenix) | Assessors can reclassify short-term-rental-available property as Class 1 commercial (15.5% ratio for TY 2026) vs. 10% residential
• Idaho | 0.43% | 0.86% (Boise) | Rentals cannot claim the homeowner's exemption of 50% of value up to $125,000
• South Carolina | 0.44% | 1.77% (Charleston) | Assessors apply a 6% ratio to rentals vs. 4% to owner-occupied homes, plus full school millage; Charleston apartments pay about 3.3x the homestead rate
• Utah | 0.45% | 0.45% (Salt Lake City) | Primary residences get a 45% exemption; rentals are taxed on full value
• Tennessee | 0.46% | 1.11% (Nashville) | -
• West Virginia | 0.48% | 1.82% (Charleston) | -
• Nevada | 0.50% | 1.11% (Las Vegas) | -
• Delaware | 0.51% | 1.83% (Wilmington) | -
• Colorado | 0.52% | 0.46% (Denver) | -
• Arkansas | 0.54% | 1.36% (Little Rock) | -
• Mississippi | 0.54% | 2.91% (Jackson) | Assessors apply a 15% ratio to non-owner-occupied residential vs. 10% to owner-occupied
• Louisiana | 0.56% | 1.26% (New Orleans) | -
• Wyoming | 0.58% | 0.63% (Cheyenne) | -
• Montana | 0.59% | 0.50% (Billings) | -
• New Mexico | 0.61% | 1.46% (Albuquerque) | -
• North Carolina | 0.62% | 0.69% (Charlotte) | Reassessment occurs as infrequently as every 8 years
• California | 0.69% | 1.19% (Los Angeles) | Assessors reset value to the purchase price at sale under Prop 13
• Kentucky | 0.72% | 1.03% (Louisville) | Rentals lose the homestead exemption, set at $49,100 for 2025–26
• Washington | 0.74% | 0.85% (Seattle) | -
• Virginia | 0.75% | 0.69% (Virginia Beach) | -
• Indiana | 0.76% | 2.19% (Indianapolis) | Rentals lose the homestead standard deduction and fall under the 2% circuit-breaker cap rather than the 1% homestead cap
• Florida | 0.76% | 1.65% (Jacksonville) | Caps non-homestead increases at 10%/yr vs. 3% for homesteads; assessors reset value to market at sale
• Georgia | 0.77% | 1.61% (Atlanta) | -
• Oklahoma | 0.78% | 1.37% (Oklahoma City) | -
• Oregon | 0.79% | 2.61% (Portland) | State law caps assessed-value growth at 3%/yr
• Missouri | 0.85% | 1.52% (Kansas City) | -
• Alaska | 0.90% | 1.35% (Anchorage) | -
• Maryland | 0.90% | 2.33% (Baltimore) | Owners forfeit the 10% homestead assessment cap when the property transfers
• Maine | 0.90% | 1.20% (Portland) | -
• North Dakota | 0.94% | 1.31% (Fargo) | -
• Massachusetts | 0.95% | 1.02% (Boston) | -
• Minnesota | 0.99% | 1.65% (Minneapolis) | Minneapolis apartments pay about 22% more than equal-value homesteads
• Rhode Island | 1.00% | 2.22% (Providence) | -
• South Dakota | 1.00% | 1.51% (Sioux Falls) | -
• Michigan | 1.13% | 3.70% (Detroit) | Rentals pay up to 18 extra school operating mills
• Pennsylvania | 1.14% | 1.21% (Philadelphia) | No uniform statewide reassessment cycle
• Wisconsin | 1.19% | 2.05% (Milwaukee) | -
• Kansas | 1.20% | 1.25% (Wichita) | Favorable: multifamily keeps the 11.5% residential ratio rather than 25% commercial
• New York | 1.23% | 2.49% (New York City) | NYC assesses 4+ unit buildings at a 45% ratio vs. 6% for 1–3 family homes
• Texas | 1.24% | 2.04% (Houston) | Rentals cannot claim the $140,000 school homestead exemption or the 10% appraisal cap
• Iowa | 1.25% | 1.71% (Des Moines) | -
• Ohio | 1.28% | 2.27% (Columbus) | -
• New Hampshire | 1.35% | 1.32% (Manchester) | -
• Connecticut | 1.36% | 1.63% (Bridgeport) | Mill rates swing more than six-fold between towns, so the parcel's town matters more than the state average
• Nebraska | 1.38% | 1.85% (Omaha) | -
• Vermont | 1.40% | 2.30% (Burlington) | -
• New Jersey | 1.68% | 1.82% (Newark) | Highest average dollar bills in the country
• Illinois | 1.79% | 1.44% (Chicago) | Cook County assesses residential at 10% of market value, commercial at 25%

Owner-occupied rates: Tax Foundation Facts & Figures 2026, calendar year 2024, effective tax as a share of owner-occupied home value. Rental rates: Lincoln Institute and MCFE 50-State Property Tax Comparison for 2025, effective tax on a $600,000 apartment in each state's largest city. City rentals routinely diverge from the statewide owner-occupied benchmark, so treat the rental column as a directional read. Blank caveat cells mean this table does not flag a distinct statewide rental rule; verify the parcel's local rules regardless.

How assessors calculate property tax on a rental

Your bill starts with market value and the assessment ratio, then the local mill rate determines the tax. Use this formula: tax = (market value × assessment ratio) × mills ÷ 1,000.

Run a Georgia example. Georgia assessors apply 40% of fair market value to a $300,000 single-family rental, producing an assessed value of $120,000. If the overlapping local governments levy 30 mills, the bill is $120,000 × 30 ÷ 1,000 = $3,600. That is a 1.2% effective rate ($3,600 ÷ $300,000), which is the number to plug into your underwriting, even though the nominal rate reads "30 mills" and the state's published owner-occupied rate reads 0.77%.

Assessed value vs. fair market value

Assessed value is the taxable figure the tax assessor puts on the roll; fair market value is what the property would sell for. The assessment ratio bridges the two, and assessment rules vary by state, so the gap between taxable value and sale price can look very different depending on where a property sits. Comparing the assessment ratio against a market's median home value shows how far the taxable figure can diverge from what a property would sell for. Arkansas assesses at 20% of market value, while Ohio uses 35%. Connecticut uses 70%. Texas and Florida assess at 100%. New Jersey does too. Do not assume the list price is the taxable value; in a 20%-ratio state that assumption would overstate the bill five-fold.

Assessors often value below the statutory ratio. Virginia requires 100% assessment by statute, yet its 2023 statewide median assessment-to-sales ratio was 83.25%. Check the county's most recent ratio study.

What is a mill rate?

A mill is $1 of tax per $1,000 of assessed value, so the 30 mills in the Georgia example above means $30 per $1,000 of the $120,000 assessed figure. Mill rates differ sharply within a single state: Connecticut's FY 2025–26 real estate mill rates run from 10.85 in Washington to 68.95 in Hartford, a 6x spread.

Why the published rate is not the rate you will pay

State law and local assessment practices determine how closely the published rate tracks your future bill:

• Full-value states (Texas, Florida, New Jersey, Massachusetts) assess at 100% of market value, so the published effective rate maps reasonably well onto a new purchase.
• Fractional states apply a ratio first, so the nominal mill rate looks alarming until you adjust. Arkansas uses 20% and Ohio uses 35%. Connecticut uses 70%.
• Acquisition-value and sale-reset states break the seller's bill. California sets your taxable base at your purchase price. Florida and Michigan reassess annually, while South Carolina follows a five-year cycle. Each state uncaps or re-appraises at transfer.

Under Florida Statute §193.155, Florida assessors must set non-homestead property at fair market value as of January 1 of the year following a change of ownership. In Michigan, a transfer of ownership uncaps taxable value in the calendar year following the sale under Proposal A. South Carolina's Act 388 caps assessment growth at 15% between reassessments but triggers a point-of-sale appraisal at full market value on any assessable transfer.

California Proposition 13 and acquisition-value caps

California shows how an acquisition-value system makes a high nominal-rate state (1%+ on assessed value) cheap for long holders and expensive for buyers. Prop 13 fixes the base rate at 1% of assessed value, plus voter-approved debt averaging about one-tenth of 1%; 2024–25 county averages run from 1.000% to 1.248%, with Los Angeles County at 1.181%. Assessed value can grow no more than 2% per year between sales.

Hold long enough and the gap compounds. In San Jose, researchers in the new-homebuyer tax study estimate the bill on a newly purchased median-valued home at $16,119 versus $7,941 for an average-tenure home, a difference of $8,178 per year.

Buying in California means paying the full new-buyer rate on day one. But once you own, the 2% growth cap protects you from the reassessment shocks that hit investors in market-value states, which makes California unusually predictable for a long-term hold.

Lowest and highest property tax states for rental investors

On the owner-occupied measure in the table above, the cheapest states by effective rate are Hawaii (0.31%), Alabama (0.37%), Arizona and Idaho (both 0.43%), South Carolina (0.44%), and Utah (0.45%). But a low rate on a high median home value can still produce a large dollar bill. Honolulu's median-valued home runs about $920,000, so even Hawaii's fractional rate works out to a meaningful check every year, which is why you should read each rate against the local median home value rather than treating the percentage in isolation. At the other end, the highest owner-occupied rates are Illinois (1.79%), New Jersey (1.68%), Vermont (1.40%), Nebraska (1.38%), and Connecticut (1.36%). Dollar bills tell a slightly different story than rates: New Jersey still carries the heaviest average single-family bill in the country at $10,499, against a $4,427 national average.

In the Lincoln Institute and MCFE 50-state study for 2025, researchers measured the tax owners paid on a $600,000 apartment plus $30,000 in fixtures in each state's largest city. The extremes:

• Highest apartment rate | Rate | Lowest apartment rate | Rate
• Detroit, MI | 3.70% | Honolulu, HI | 0.33%
• Jackson, MS | 2.91% | Salt Lake City, UT | 0.45%
• Aurora, IL | 2.81% | Denver, CO | 0.46%
• Portland, OR | 2.61% | Billings, MT | 0.50%
• New York City, NY | 2.49% | Cheyenne, WY | 0.63%

Jackson, Mississippi lands in the highest five even though Mississippi's statewide owner-occupied rate is just 0.54%, consistent with the state's 15% ratio on non-owner-occupied residential. And a low rate does not always mean low taxes overall. Honolulu's 0.33% apartment rate sits on some of the most expensive real estate in the country, so the dollar bill is nowhere near the lowest. That low rate also evaporates when a property runs as a short-term rental and Honolulu assessors reclassify it into the transient vacation tiers.

How property tax affects cash flow and investment returns

Property tax hits your Schedule E as a straight operating expense, reducing NOI dollar-for-dollar. National Apartment Association analysts reported in their 2024 benchmarks that real estate taxes averaged $2,192.58 per unit, 10.08% of operating expenses.

Applied to that $630,000 apartment property, Detroit's 3.70% rate produces roughly $23,300 in annual tax; Honolulu's 0.33% produces about $2,100. At the multifamily cap rate benchmark of roughly 6.2%, investors would value the identical asset more than $300,000 differently because of that $21,000 NOI gap.

When taxes depend on value, appraisers may load the effective tax rate into the capitalization rate. A New Jersey Tax Court multifamily case applied a 6.75% market cap rate loaded with a 2.929% effective tax rate, producing a 9.678% overall rate and a $12,850,000 value.

Local property-tax charges

Investors who rely on state averages can miss the county and municipal stack that sets the bill, and the stack can double the number they budgeted. Pull the composite rate for the parcel's specific tax code area, then check these patterns:

• The Cook County primer reports that most property owners pay between 7 and 15 taxing districts simultaneously, and composite rates in Northlake reached 11.328% of equalized assessed value in 2023. That composite rate is not the only line to check, however: some jurisdictions layer a personal property tax on fixtures or equipment on top of the real property stack, meaning a buyer who budgets only for the published rate may still face additional assessments on fixtures and other business personal property. Separately, a parcel carrying prior-owner tax delinquency can transfer liens or arrears to a new buyer at closing, so confirming there are no outstanding delinquencies is as important as pulling the composite rate for the parcel's specific tax code area.
• A Dallas parcel paying county, school district, college, and hospital levies carries about $1.53 per $100 of value in 2025; inside Dallas County MUD #4, another $1.00 pushes the combined rate near 2.53 per $100 on the Dallas County rate schedule.
• New Jersey's 2024 average residential bills swing hard between North Jersey municipalities: $9,794 in Hackensack versus $25,415 in Millburn Township.
• ATTOM analysts place the effective-rate range among large counties with at least 10,000 single-family homes at 0.18% in Sussex County, Delaware and 4.59% in Schuylkill County, Pennsylvania, against a 0.90% national average.

Do landlords pay higher property taxes than owner-occupants?

Often, yes. Homestead exemptions exist in 46 states and DC, and all of them restrict eligibility to a principal residence, so your rental gets nothing. On average, apartments pay 46% more than homesteads on equal-value property, and Harvard JCHS found 5+ unit apartment properties carry a median effective rate 27% higher than owner-occupied houses. As the Tax Foundation puts it, "Homestead exemptions shift the tax burden to commercial and multi-unit rental properties, which are not eligible for this exemption."

• South Carolina owner-occupants get the 4% ratio and a 100% exemption from school operating millage; landlords get neither.
• In Michigan's Alcona Township, the 2024 principal-residence millage was 20.39 versus 38.39 for non-homestead property, an 18-mill penalty for renting the place out.
• Maui County goes furthest: FY 2026 Tier 1 rates are $1.65 per $1,000 for owner-occupied versus $5.87 for non-owner-occupied, more than 3.5x on the same value.

Senior and disability exemptions follow the same owner-occupancy logic. When you model a purchase, strip every exemption from the seller's bill before you trust the number.

Deducting rental property taxes on Schedule E

Landlords can fully deduct rental property taxes as an ordinary operating expense. IRS Publication 527 states that landlords can deduct rental expenses such as maintenance, insurance, taxes, and interest from rental income. Schedule E is where these taxes belong; the Schedule A instructions explicitly bar you from double-counting taxes you deduct elsewhere.

The SALT cap never touches Schedule E. IRS Topic 503 limits the state and local tax deduction to $40,000 ($20,000 married filing separately) and defines the cap by reference to Schedule A lines 5a–5c. IRC §164(b)(6) carves out taxes paid in carrying on a trade or business or a §212 income-producing activity, which covers rental real estate. The Tax Adviser confirms that landlords deduct state and local property taxes directly against rental or business income under Sec. 212 or 62(a)(1), outside the SALT cap.

Congress enacted the One Big Beautiful Bill Act on July 4, 2025, raising the personal cap to $40,000 for 2025 with a phaseout starting at $500,000 MAGI. None of it changes anything for landlords: you could deduct your rental's $15,000 New Jersey tax bill in full before OBBBA and can still deduct it in full after.

Strategies to reduce your rental property tax burden

Start with the assessment itself:

• Appeal the assessment before the deadline. Deadlines are hard cutoffs. April 1 applies in most New Jersey districts. In Texas, the deadline is May 15 or 30 days after your notice. In most New York jurisdictions, the deadline is the fourth Tuesday in May. Roughly 50% of Cook County Board of Review appellants received reductions in tax years 2023 and 2024, and Harris County's 516,205 protests in 2024 produced an average 6.98% value reduction. Bring comparable sales; New Jersey boards accept up to five.
• Watch the reassessment calendar. North Carolina reassesses as seldom as every 8 years. Ohio follows a 6-year cycle with a triennial update. Maryland uses a 3-year cycle. Chicago's 2024 reassessment raised overall assessed value 22%. If you buy a property the year before a cyclical reval, it can carry a very different bill the year after, so model the bill as it will read after the next reval. In acquisition-value and sale-reset states, a flip triggers reassessment at your acquisition and again for the next buyer, so short holds rarely realize the benefit of any assessment cap.
• Know when short-term rental use changes your classification. Arizona assessors reclassify STR-available property as commercial, with the Class 1 assessment ratio at 15.5% for tax year 2026. In South Carolina, an owner may keep the 4% ratio on a qualifying owner-occupied residence rented no more than 72 days per year. Maui's TVR classification runs $12.50–$15.55 per $1,000.

STR operators also face lodging taxes on top of property tax. Austin's combined hotel occupancy tax hits 17%; Hawaii's state TAT rises to 11% on January 1, 2026, plus a 3% county surcharge in all four counties. Delaware (4.5%, 2025) and Rhode Island (5% whole-home, 2026) added new STR taxes, while Vermont added a 3% tax in August 2024.

FAQ

Verify the parcel's local tax code before relying on these answers.

Which states have the lowest property taxes for rental investors?

On the statewide owner-occupied measure, Hawaii, Alabama, Arizona, Idaho, South Carolina, and Utah post the lowest effective rates, all at 0.45% or under. For apartment properties specifically, Honolulu, Salt Lake City, Denver, and Billings had the lowest big-city rates in the Lincoln Institute's 2025 study of taxes on a $600,000 apartment. Check the rental-specific caveats first, since Hawaii and Utah both treat non-owner-occupied property less favorably than the headline rate suggests.

What property tax rate will I pay on a rental?

Multiply the parcel's likely assessed value (your purchase price in full-value and acquisition-value states, purchase price times the assessment ratio elsewhere) by the combined local mill rate. Then remove any homestead exemption the seller claimed on the bill. In classified states like South Carolina or Minnesota, apply the non-owner-occupied ratio. Keep in mind that a tax assessor sets the roll value using assessment rules that differ by state. The assessor may benchmark against a market's median home value as a reference point for comparable sales. For multifamily or commercial parcels, the assessor may instead use the income method (capitalizing net operating income) rather than comparable sales entirely. Understanding which approach your assessor uses helps you anticipate whether your assessed value will track your purchase price or diverge from it.

Can I claim a homestead exemption on a rental property?

No. All 46 states with homestead exemptions restrict them to a principal residence, and claiming one improperly carries real enforcement risk; a Philadelphia Controller's investigation projected improper claims could cost that city $11.4 million annually.

How much does property tax affect rental cash flow?

Taxes typically run about 10% of apartment operating expenses and reduce NOI dollar-for-dollar. On identical $630,000 buildings, the tax gap between the highest- and lowest-rate major cities exceeds $21,000 a year, which capitalizes into hundreds of thousands of dollars of value difference.

Can landlords deduct rental property taxes on Schedule E?

Yes, in full, as an ordinary operating expense against rental income. The SALT cap applies only to Schedule A itemized deductions, so it never limits the property taxes on your rentals.

Why shouldn't I trust the seller's tax bill when underwriting?

California resets your taxable base to the purchase price. Florida and Michigan uncap taxable value after a transfer, while South Carolina re-appraises at the point of sale, so the seller's capped bill disappears the year after closing. Even elsewhere, the seller may carry a homestead exemption. Senior or veteran exemptions may also apply, and you may not qualify for them.

Which states cap assessment increases like California's Prop 13?

Oregon caps maximum assessed value growth at 3% per year, and Michigan caps post-transfer growth at the lower of 5% or CPI. Florida caps non-homestead assessments at 10% annually. South Carolina caps increases at 15% between reassessments. Michigan and Florida uncap taxable value in the year following a transfer of ownership, while South Carolina triggers a point-of-sale appraisal. Those caps protect you only after you buy; Oregon's cap is not tied to a change of ownership in the same way.

How can I lower my rental property tax bill?

File an assessment appeal with comparable sales before your jurisdiction's deadline, since roughly half of Cook County appellants win reductions and Harris County protests cut values about 7% on average in 2024. Beyond appeals, time purchases around reassessment cycles and avoid STR classifications that trigger commercial assessment ratios.

Both of those levers work on the assessed value the tax assessor uses to calculate your bill. A third lever operates at the federal level instead: depreciation reduces the taxable rental income you report on Schedule E, and a cost segregation study can accelerate those deductions by reclassifying building components, such as wiring and fixtures, as 5- or 7-year personal property. Other components may qualify for 15-year treatment rather than the standard 27.5-year residential schedule. Depreciation on that default schedule runs automatically over nearly three decades. A cost segregation study front-loads deductions into the early years of ownership when they are most valuable.

Insurance is the other fixed carrying cost you can price before closing, and unlike the tax bill you can shop it. Get a quote in minutes at quote.steadily.com. No phone call required.