Total Taxes by State: Income Tax + Property Tax (and what it means for horse properties)

When buyers shop for horse property, they’re rarely just comparing barns and acreage—they’re comparing carrying cost. And in many states, the biggest “forever cost” lines on the spreadsheet are:

• State income tax (what you pay on earnings each year), and
• Property tax (what you pay to hold land, barns, homes, and improvements)

This blog looks at combined “headline taxes” (income + property) and then adds the extra layer that matters for HorseProperties.Net: how agricultural classification can change the property-tax math.

How we’re ranking “combined taxes” in this post

To keep this useful (and not 50-state tax code soup), we’re using two widely comparable measures:

1. Top state income tax rate (or “none”) by state (Experian)
2. Effective property tax rate by state (a standardized statewide effective rate) (Rocket Mortgage)

Important reality check: your actual bill depends on county millage, exemptions, the home value vs. land value split, and whether the land qualifies for agricultural assessment.

States with the lowest combined taxes (income + property)

These are the states that tend to show up as “best case” for buyers because they combine no (or very low) income tax with low-to-moderate property tax rates.

Best overall “low combined” cluster

• Wyoming — No income tax (Experian) + low property tax (0.58%) (Rocket Mortgage)
• Tennessee — No income tax (Experian) + low property tax (0.55%) (Rocket Mortgage)
• Nevada — No income tax (Experian) + low property tax (0.49%) (Rocket Mortgage)
• Florida — No income tax (Experian) + moderate property tax (0.79%) (Rocket Mortgage)

Also often attractive for horse-property buyers (depending on county)

• South Dakota — No income tax (Experian) + higher property tax (1.09%) (Rocket Mortgage)
• Washington — No wage income tax (Experian) + moderate property tax (0.84%) (Rocket Mortgage) (note: WA has a capital gains tax that can affect high earners) (Experian)
• Alabama — low-ish income tax (2%–5%) (Experian) + lowest property tax rate (0.38%) (Rocket Mortgage)

Horse property lens: In these states, buyers often find that “holding the land” is less punishing year after year—especially if agricultural valuation is available (more on that below).

States with the highest combined taxes (income + property)

These states tend to hit buyers from both directions: higher income taxes and/or very high property taxes.

Highest combined “double hit” states

• New Jersey — top income tax rate up to 10.75% (Experian) + highest property tax rate (2.23%) (Rocket Mortgage)
• New York — top income tax rate up to 10.9% (Experian) + very high property tax (1.60%) (Rocket Mortgage)
• Connecticut — top income tax rate up to 6.99% (Experian) + very high property tax (1.92%) (Rocket Mortgage)
• Illinois — flat income tax (4.95%) (Experian) + very high property tax (2.07%) (Rocket Mortgage)
• Vermont — top income tax up to 8.75% (Experian) + very high property tax (1.71%) (Rocket Mortgage)

The “income tax heavyweight” that still matters for horse buyers

• California — highest income tax rate (13.3%) (Experian) + mid-range property tax (0.71%) (Rocket Mortgage)
  Even with a more moderate statewide property-tax rate, high-earning buyers often feel the income-tax side very strongly.

The horse-property factor most rankings miss: Agricultural assessment can change property taxes

Here’s the nuance that matters on HorseProperties.Net:

Many states reduce property taxes on land used for agriculture through “differential” or “use-value” assessment—meaning land can be taxed based on its agricultural use value rather than its full market/development value. (National Agricultural Law Center)

That can be a massive difference on horse farms where:

• acreage is high,
• market value includes “estate” demand,
• and land could otherwise be assessed like residential development potential.

What this means in real life

• A state with “high” average property taxes may still be workable for equestrian buyers if the county aggressively applies agricultural valuation and your acreage qualifies.
• A state with “low” statewide rates can still surprise you if a specific county has high millage, or if your property doesn’t qualify as agricultural.

Common triggers that affect ag classification: minimum acreage, proof of ag production/income, application deadlines, and rollback penalties if land use changes. (National Agricultural Law Center)

Practical takeaway for buyers shopping horse properties across state lines

If you’re comparing two horse properties in two different states, don’t stop at “state tax rankings.” Instead, ask these three questions early:

1. Does the state have income tax (and how high does it go)? (Experian)
2. What’s the property tax rate—and what’s typical in this county? (Rocket Mortgage)
3. Can this acreage qualify for agricultural/use-value assessment, and what are the rules/penalties? (National Agricultural Law Center)

That’s how you get to the real number that matters: your annual cost to hold the farm.

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