Five states charge no property tax at all
Five U.S. states do not levy a property tax: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, "no property tax" does not mean no housing costs — these states fund schools and services through other taxes, and some charge taxes on specific property types or have other fees that affect homeowners.
The absence of property tax is the headline, but the real picture depends on what you own and where in the state you live. A homeowner in one of these states may still pay local assessments, special district fees, or state income tax that homeowners in high-property-tax states do not. Understanding what is actually taxed — and what is not — matters more than the straightforward "no property tax" label.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no statewide property tax on residential real estate.
- These states fund schools and local services through income tax, sales tax, or other revenue sources instead of property tax.
- Even in no-property-tax states, homeowners may pay local assessments, special district fees, or state income tax that reduce the overall tax advantage.
- Some of these states tax specific property types — such as commercial real estate or vehicles — even though residential property is exempt.
- The total tax burden on homeowners varies widely within each state depending on local fees and the state's other tax structure.
Alaska: No property tax, but high state income and sales taxes do not explore
Alaska has no statewide property tax and no state income tax or sales tax. This combination makes it the most tax-friendly state for homeowners in terms of direct housing costs. However, municipalities in Alaska can and do impose local property taxes — Anchorage, Juneau, and Fairbanks all charge property tax to residents. The statewide absence of property tax does not mean your home is tax-free if you live in a city.
Local property tax rates in Alaska's major cities range from roughly 0.84% to 1.19% of assessed value, which is lower than the national average but still a real cost. Additionally, Alaska charges no income tax, which is a significant advantage for wage earners, but the state relies heavily on oil revenue and does not have a broad-based sales tax to replace property tax revenue in all areas.
Delaware: No property tax on residential real estate, but commercial property is taxed
Delaware exempts residential real estate from property tax statewide, but the state taxes commercial property, rental properties, and land held for investment. If you own a home and live in it, you pay no property tax. If you own an apartment building or commercial space, you do pay property tax on that property.
Delaware funds schools and local services through income tax, sales tax, and corporate taxes. The state has no sales tax on groceries or prescription drugs, but does tax most other purchases. Homeowners in Delaware benefit from the residential exemption, but the state's overall tax burden depends on income level and spending habits.
Montana: No property tax on primary residences, but other property is taxed
Montana exempts primary residences from property tax but taxes vacation homes, rental properties, agricultural land, and commercial real estate. The exemption applies only to the home where you live — if you own a second property or investment real estate, that property is subject to Montana's property tax.
Montana has no sales tax, which is another advantage for residents, but the state funds schools through income tax and other revenue sources. Property tax rates on taxable property in Montana vary by county and can range from 0.5% to over 1% of assessed value. The primary residence exemption is substantial, but it does not cover all real estate ownership.
New Hampshire: No property tax on residential real estate, but high education funding costs
New Hampshire has no statewide property tax on residential real estate and no sales tax. However, New Hampshire has no income tax either, which means the state funds schools and services through other mechanisms — primarily local education taxes and fees. Many New Hampshire towns impose a "statewide education property tax" that functions as a property tax despite the state's no-property-tax label.
This education tax varies by town but can be substantial. Additionally, New Hampshire taxes interest and dividend income at 5%, which affects retirees and investors. The absence of a broad property tax is offset by education funding mechanisms that still require homeowners to contribute to school costs through local assessments.
Oregon: No property tax on primary residences, with significant limitations
Oregon exempts primary residences from property tax under Measure 50, passed in 1997, but the exemption comes with strict limits. The exemption applies only to the first $125,000 of assessed value on your primary home (this limit is adjusted annually for inflation). Any value above that threshold is taxed at the standard rate. Additionally, Oregon taxes rental properties, vacation homes, and commercial real estate normally.
Oregon has no sales tax but does have state income tax. The property tax exemption is real for modest-value homes but provides less benefit as home values increase. In high-cost areas of Oregon, such as Portland, the exemption may cover only a portion of your home's assessed value, and you will owe property tax on the remainder.
How these states fund schools and services without property tax
States without property tax must raise revenue through other sources. Alaska relies on oil revenue and does not tax income or sales broadly. Delaware, Montana, and Oregon use income tax and sales tax (though Montana and Oregon have no sales tax). New Hampshire uses income tax on interest and dividends, plus local education taxes that function similarly to property tax.
The trade-off is that residents in these states often pay higher income tax or sales tax than residents in high-property-tax states. A homeowner in Oregon or Montana may pay less in total housing costs but more in income tax. The overall tax burden — property, income, and sales combined — varies by individual income, spending, and home value. No state is universally "cheaper" for all residents; the advantage depends on your personal situation.
Frequently Asked Questions
Do I have to pay property tax if I own a home in one of these five states?
It depends on the state and what you own. If you own a primary residence in Delaware, Montana, New Hampshire, or Oregon, you likely do not pay property tax on that home. In Alaska, it depends on your city — Anchorage and Juneau charge property tax, but some rural areas do not. If you own rental property, commercial property, or a vacation home in any of these states, you may still owe property tax.
If there is no property tax, how do schools get funded?
These states fund schools through income tax, sales tax, oil revenue, or local education assessments. New Hampshire uses a statewide education property tax that functions like property tax despite the state's no-property-tax label. The funding mechanism varies by state, but the money comes from somewhere — usually from residents' income or purchases rather than home value.
Is the total tax burden lower in states with no property tax?
Not necessarily. A state with no property tax may have higher income tax or sales tax that offsets the savings. The total tax burden depends on your income, spending habits, and home value. A high-income earner in Oregon may pay more in state income tax than a moderate-income earner in a high-property-tax state pays in property tax. Compare your personal situation, not just the property tax rate.
Can I move to one of these states to avoid property tax?
You can move to any state you choose, but the tax savings depend on your circumstances. If you own a modest primary residence and have moderate income, a no-property-tax state may save you money. If you have high income or own investment property, the income tax or other taxes in that state may offset the property tax savings. Research the specific state's full tax structure before deciding.
What about local fees and assessments in these states?
Even in states with no property tax, homeowners may pay local assessments for schools, roads, water, or other services. These fees are not called "property tax," but they function similarly and are based on property value or ownership. Ask your local government about all fees and assessments before assuming your housing costs will be low.