Property taxes are often the largest operating expense for rental property owners — sometimes larger than insurance and maintenance combined. These 25 cities have the lowest effective property tax rates in our database, giving investors a significant cash flow advantage.
These 25 cities represent the lowest markets based on tax rate. Honolulu, HI leads the ranking with 0.28% tax rate at a $845K median price. Even Fort Collins, CO at #25 shows 0.5% — a solid metric.
Across this ranking, the average cap rate is 4.96% (vs 3.81% nationally), average prices are $373K (vs $333K nationally), and average rents are $1,724/mo.
Geographic distribution: the South (18 cities), the West (7 cities). The South dominates this ranking — investors in other regions may need to look at out-of-state investing.
Property taxes are the largest recurring expense for most landlords, and they vary dramatically by state and city. These 25 low-tax markets give investors a structural advantage: more of each rent dollar flows to the bottom line. A 0.5% tax rate vs a 2% rate on a $200,000 property saves $3,000/year — that's the difference between a 5% cap rate and a 6.5% cap rate. When comparing cities, always factor in effective tax rates, not just sticker prices.
Next steps: Click any city above to see its full analysis page with interactive cap rate and cash-on-cash calculators pre-filled with local data. Compare your top picks head-to-head using our city comparison tool, or explore the interactive cap rate map to visualize these markets geographically.
For a comprehensive market selection framework, read our guide on how to analyze a rental property in 15 minutes.