In the present study, an exact analytical methodology is developed to determine the temperature distributions, tip temperatures, heat transfer rates and fin efficiencies for annular fins with stepped rectangular profiles assuming 1) constant thermal conductivity, 2) uniform convective heat transfer coefficient in the neighboring fluid and 3) variable step radius. The two quasi one-dimensional heat conduction equations for the thick and thin parts in annular fins with stepped rectangular profiles subject to the appropriate boundary conditions are solved with modified Bessel functions of first and second kind of order zero and one. The thermo-geometric parameter chosen to oversight the heat transfer analysis is the Biot number based on the inner radius, which is also related to the Biot number based on the thick part.