The Hands-Down Best Tax Breaks For Homeowners In These 11 US States

When you consider the number of states with high property taxes, knowing where homeownership can actually provide you with tax breaks is a win-win proposition. One, you own a home. Two, you own a home that is returning financial benefits to you in the form of tax breaks. North Carolina, Michigan, Kentucky, Arkansas, Iowa, Ohio, Pennsylvania, Louisiana, Indiana, North Dakota, and Arizona are 11 states where you'll find the best tax breaks for homeowners, hands down, based on multiple researched factors. Homestead exemptions, mortgage interest and point deductions, tax deductions related to property management, state legislation, First-Time Home Buyer programs, as well as senior and veteran exemptions are some examples.

In addition to tax breaks for homeowners, according to Intuit TurboTax, all of the aforementioned states with the best tax benefits also happen to have the lowest income tax rates in the country. The highest tax rate for all taxpayers in North Dakota and Ohio sits at 2.5% and 3.1% compared to states like California and Hawaii at 13.3% and 11%, respectively. In light of federal tax breaks — like those related to the Residential Clean Energy Credit and the Energy-Efficient Home Improvement Credit, which were ended by the Trump Administration — knowing where and how to claim tax breaks is perhaps more important than ever.

According to the North Carolina Department of Revenue, property taxes and mortgage interest qualify for deductions but the combined total amount of deductions shouldn't exceed $20,000; this rule doesn't change even if you're a couple living under the same roof filing taxes individually, or as a married unit to a total of $10,000 per person. This rule extends to state and local property taxes. If you own real estate as an investment property, according to Edelman Financial Engines, you'll also get a break on your capital gains, which is one way to regulate unrealized capital gains. The primary residence exclusion allows homeowners who sell an investment property to deduct up to $250,000 worth of capital gains as an individual home seller, or up to $500,000 for a married couple. 

If you redirect the profit from the sale of your property into another investment property, thanks to the 1031 exchange provision, you are able to defer the capital gains tax. You just need to ensure the new property is similar to the property sold, and that the exchange of property is completed within 180 days of selling the previous residence. For seniors who already own property in the state, downsizing to the best places to retire in North Carolina don't have to come with an overbearing tax burden. 

According to the Michigan Department of Treasury, whether you are a homeowner or a renter you can take advantage of the Homestead Property Tax Credit. To be eligible you need to have been living in a Michigan property for at least six months — renters need to be able to show a lease agreement while homeowners need to show a tax statement with a specific taxable value amount — and not be an incorporated entity or trust. Your total household income also needs to be below the allowed maximum to take advantage of the provision. In 2025, a maximum taxable home value of $165,400 offered a maximum tax credit of $1,900 that could be used to offset or lower your total property tax. However, your total household income would have to be $71,500 or less. 

The First Time Homebuyer Savings Account Program allows first time buyers to open a tax deductible savings account with up to $50,000 in savings towards the purchase of their first home between 2022 and 2026. A couple filing taxes jointly can deduct up to $10,000, while an individual can deduct as much as $5,000 in taxes. Once you purchase the home, you can deduct the interest on up to a $750,000 mortgage, or if you have points toward mortgage interest paid upfront at purchase, you can also claim a deduction on that interest. Tax breaks are one reason why Ann Arbor is a great place to retire. 

The horse capital of the world also happens to be one of the best places to retire, and according to the Kentucky Department of Revenue, a Homestead Exemption targeting seniors 65 years old and up only sweetens the deal. The exemption also extends to Kentuckians with disabilities. While both claimants will have to reapply every year for the exemption, those classified as having total disability by the Social Security Administration or the Kentucky Retirement Systems don't need to reapply — nor do veterans suffering a disability as a result of military service. For 2026, the amount of the applicable exemption is $49,100, meaning a home valued at $250,000 would be assessed at $200,900.

For landlords who are renting out investment properties, any payments related to utilities including security surveillance systems and trash collection, as well as repairs to the property — specifically, roof repairs, plumbing issues, electrical, window replacement, and appliance repair — are tax deductible. The depreciation of rental property built after January 1, 2020, can be deducted for a maximum of $100,000 for up to 27.5 years. If you are both a resident and owner of the property you're selling, so long as you've lived in the home for at least two of the last five years, you have the benefit of a home sale exemption in the range of $250,000 for an individual to $500,000 for a married couple.  

According to the Arkansas Department of Finance & Administration, homeowners can claim up to $600 in tax credits with the Homestead Tax Credit. This benefit extends to people living in their homes, homes that are part of trusts, and even seniors living in retirement communities or nursing homes who still retain ownership of the property. This is a $100 raise in eligible tax credits per year from previous years when the tax credit was $500. For seniors, additional tax breaks allow for homeowners 65 years old and older to freeze the current tax assessed value of their property for next year's assessment, so long as no major renovations were undertaken that would raise the home's value by 25% or greater. Even if you didn't make use of the aforementioned tax benefits, as long as the property isn't new construction or under major renovations, the state cap on how much your home can be assessed for also benefits your property taxes. Amendment 79 also ensures your property value is never assessed at more than five percent per year until the home appreciates to full value. 

Keep in mind, however, these tax breaks won't affect your income taxes, nor can they be used for rental or investment properties, second homes, or rentals. Although the state is one of the cheapest states to live with great tax breaks for homeowners, there are reasons Arkansas isn't considered the best place to live that have nothing to do with property taxes.  

As per the Iowa Department of Revenue, residents of the state who are 65 years or older are eligible for the Homestead Tax Credit, so long as they are 65 years of age on the first day of the year they are being assessed for. The tax credit can be applied to up to $6,500 of taxed value, and once approved, is an automatic credit the senior homeowner will continue to receive. This underrated state with a low cost of living also exempts Social Security income, so the addition of property tax credits should only make Iowa more enticing to retirees. If you're a retired or honorably discharged military serviceperson, you are eligible for a homestead tax credit of up to $4,000, too. According to the U.S. Army, if you are an ex-military homeowner with a service-related disability rated at 100% by Veterans Affairs, have a permanent disability related to military service impacting your employability, or are the surviving spouse of one, Iowa's Disabled Veteran's Homestead Tax Credit provides a 100% property tax credit annually.

If your property includes farmland of 10 acres or more, there is the Iowa Family Farm Property Tax Credit, which is determined by the County Auditor. Mobile home owners taking advantage of the Manufactured or Mobile Home Tax Credit can be assessed by square footage versus value of the mobile home, and their tax burden is based on income. A mobile home owning household must earn less than $16,500 to qualify.  

The Ohio Housing Financing Agency (OHFA) supports homeowners with the Mortgage Tax Credit, a tax credit based on payments made on mortgage interest over the year up to a maximum of $2,000. This credit is on top of whatever the IRS offers for mortgage interest deduction, and the Plus Program version allows homeowners to deduct as much as 40% of their yearly mortgage interest up to $2,000 so long as the loan is OHFA approved. If the mortgage is from a different lender, according to Ohio Real Title, you may still qualify for a tax credit for 20% to 30% of your annual mortgage interest for the property. The Owner-Occupied Cedit is another way to take a bit out of your property taxes, with a 2.5% reduction in the tax assessed value of your home, which applies regardless of income. It's one of several tax breaks you should know if you live in or are thinking of relocating to Ohio. 

Not to be left out, Ohio also offers homeowners a Homestead Exemption for seniors 65 years and older, disabled veterans, and surviving spouses of either eligible recipients as long as they're at least 59 years of age when they claim the exemption. The exemption can lift anywhere from $25,000 to $50,000 off of the tax assessed value of your home with the latter being offered to disabled military members. 

If you operate a home business in Pennsylvania, according to the Pennsylvania Association of Realtors, you can deduct renovations and upgrades, equipment, utilities, security, and insurance protection related to your home office from your taxes. You can also lower the tax assessed value of that specific workspace in your home through assumed depreciation for 39 years. The purchase of your home in Pennsylvania comes with tax benefits, including the cost of moving your home office. Even better, beginning the year you purchase your property, your payments toward state, county, and city property tax assessment are deductible. If, after purchasing that home, you made the decision to sell it within two years, you could be eligible to exempt anywhere from $250,000 to $500,000 worth of capital gains tax from the sale. In fact, if you moved out of the home and rented it as an investment property for three years, you would still be able to enjoy your capital gains tax benefits.

For seniors and disabled residents, as per the Commonwealth of Pennsylvania, a property tax rebate program offers up to a $1,000 rebate to seniors and people with disabilities over 18 years old based on household income. If an applicant's property taxes total 15% or more of their household income, a supplemental rebate can add up to $500 in additional tax relief.   

According to DSLD Mortgage, there are a number of tax exemptions that anyone living or moving to Louisiana should be aware of, starting with the general Homestead Exemption. If the property is your main residence, you can exempt up to $75,000 of the assessed value of your home — the equivalent of $7,500 — everywhere but in Orleans Parish. In addition, residents 65 years of age and older, as well as residents and veterans with disabilities can freeze the assessed value of their homes within a special assessment level based on their household income and disability rating. For the latter, a resident must have a 100% disability rating or, for military servicepeople, a 50% rating. This all effectively means, if you own a home valued at $75,000, you would pay nothing in property taxes. 

Once you file for the exemption the first time in person, so long as you remain in the same residence you can just fill out a renewal form every year afterward to retain your tax break. Louisiana assesses homes at a tax rate of 10% of fair market value, so a $150,000 home would be assessed at $15,000. With the Homestead Exemption program exempting the first $75,000, you would see your property taxes cut in half.  

According to Indiana's Department of Local Government Finance, a tax cap keeps property taxes at a rate of 1% for homeowners living in their primary residence, while other properties like farms are capped at 2%, and secondary properties at 3%. While the assessed tax rate is capped at 1%, as per MI Homes, homeowners in Indiana receive an automatic Homestead Credit of 10% up to $300. In 2026, eligible homeowners can not only deduct $48,000 from the taxable portion of their property taxes, they can also exempt an additional 40% of the remainder of their home's taxable value. The state's goal is to exempt up to 66.7% of home's value from property taxes, making it possible for homeowners to enjoy the same tax breaks the world's wealthiest people have in common. 

Like other states in this list, Indiana also has benefits for seniors and disabled residents like the Over-65 Credit. This tax credit is $150 for single seniors earning $60,000 or less, or $70,000 or less for couples. Meanwhile, so long as medical verification is provided, residents with disabilities are eligible for a $125 tax credit in addition to the aforementioned exemptions. With all that in mind, it's no wonder that a city in Indiana is a place where a $25,000 salary would be considered middle class. 

With the potential for homeowner property taxes to disappear in the U.S., it might be interesting to know what state is ahead of the curve. According to the North Dakota Monitor, the state launched a new Primary Residence Credit program for 2025 and 2026, which raised the property tax relief program rebate from a maximum of $500 in 2024 to as high as $1,600. The impact of this measure was immediately felt by 50,000 households in the state, which represented about 30% of beneficiaries of the tax credit whose property taxes were eliminated. The program also places a property tax cap of 3% on local governments. This government mandated property tax break has wide eligibility according to Gate City Bank; you just have to own property in the state as your primary residence. That can include mobile homes, condos, town homes, duplexes, and standard homes. There's no age requirement or income barriers, but the credit cannot exceed what you owe in taxes — it can, however, total what you owe, which means you can still potentially erase your property tax burden like those 50,000 households previously mentioned.

North Dakota also enjoys a Homestead program for seniors and disabled residents which, as per Bismarck, includes up to 100% reduction of taxable property value for elderly or disabled homeowners making $40,000 or less, or up to 50% for those earning $40,001 to $70,000 per year. This reduces the taxable value of qualifying households to a maximum between $4,500 and $9,000. 

Arizona hosts one of several cities with the fastest growing wealthy populations in the U.S., and its favorable property tax situation likely has much to do with it. Whether middle class or wealthy, homeowners in Arizona can deduct their mortgage interest from their property taxes, and first time homebuyers can claim a tax credit for part of their mortgage interest that matches what they spent during that period. While you may need a million dollars to retire in this state, if you can afford it, you will also be able to take advantage of tax write-offs including the cost of home maintenance and upkeep, insurance premiums, and if you own a rental property, the cost of property management and even travel expenses related to visiting the residence.

Thanks to the State and Local Tax Deduction (SALT), state and local property taxes paid to the county are also deductible. According to Insight2Wealth, selling your primary residence as an individual or a couple can automatically exempt $250,000 to $500,000 in capital gains, respectively, further shielding your property from overtaxation.