Five states have eliminated property tax on real estate entirely
Five U.S. states collect no property tax on real estate: Alaska, Delaware, Montana, New Hampshire, and Oregon. Each state arrived at this policy through different routes and maintains different tax structures to fund schools and local services instead.
If you own a home in one of these states, you will not receive a property tax bill from your county or municipality for the land and building itself. However, "no property tax" does not mean no taxes at all—these states fund government through other methods, and some charge taxes on personal property, vehicles, or business equipment that states with property tax do not.
The practical impact depends on where you live within the state and what you own. A homeowner in Alaska pays nothing on their house but may pay local taxes on a vehicle or boat. A business owner in Delaware may face different rules than a homeowner. Understanding the full tax picture in each state requires looking beyond the headline.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon levy no property tax on residential real estate, though some tax personal property or vehicles instead.
- States without property tax fund schools and services through sales tax, income tax, business taxes, or other revenue sources that vary by state.
- Moving to a no-property-tax state does not eliminate all local taxes—you may pay higher sales tax, vehicle tax, or business licensing fees.
- Property tax savings must be weighed against the full tax burden in each state, which differs significantly from state to state.
Alaska: No property tax, funded by oil revenue and sales tax
Alaska has no state property tax and no state income tax. The state funds schools, roads, and services primarily through oil and gas revenue, which flows into the state budget. Local municipalities in Alaska may impose their own property taxes—Anchorage, Juneau, and Fairbanks do collect local property taxes—but unincorporated areas do not.
If you own property in an Alaskan city, you will pay that city's property tax rate. If you own land in an unincorporated area, you pay no property tax. Alaska also charges a 0% state sales tax, though individual cities and boroughs can impose local sales taxes ranging from 0% to 7.5%. You will pay vehicle registration fees and fishing or hunting licenses, but these are not property taxes.
Delaware: No property tax on residential real estate, but business property is taxed
Delaware exempts residential real estate from property tax but taxes commercial and industrial property. If you own a home in Delaware, you pay no property tax on the house or land. If you own a business property or rental building, you will pay property tax on that asset.
Delaware funds schools and local services through income tax (which ranges from 2.2% to 5.75% depending on income), sales tax (6%), and corporate taxes. The state is known for business-friendly policies, and many corporations incorporate in Delaware even if they operate elsewhere. Homeowners benefit from the residential exemption, but the state's income and sales taxes are higher than in some neighboring states.
Montana: No property tax on primary residences, but rental and commercial property is taxed
Montana exempts primary residences from property tax but taxes rental properties, commercial buildings, and vacant land. If you live in a house you own in Montana, you pay no property tax on that home. If you own a rental property or investment land, you will pay property tax on it.
Montana funds schools through a combination of state income tax (which ranges from 1% to 6.9%), sales tax (0% state rate, but cities and counties can impose local sales taxes up to 3%), and business taxes. The state also taxes natural resources like timber and minerals. A homeowner in Montana benefits from the residential exemption, but a landlord or investor faces property tax on their holdings.
New Hampshire: No property tax on real estate, but high taxes on vehicles and business equipment
New Hampshire has no state property tax on real estate and no state income tax on wages. However, the state taxes vehicles, boats, and business equipment through what it calls a "property tax" on personal property. New Hampshire also has no state sales tax.
New Hampshire funds schools and services through a 5% tax on business profits, a 5% tax on interest and dividends, and property taxes on vehicles and equipment. A homeowner pays no tax on the house itself but will pay an annual vehicle registration fee that functions as a property tax on the car. The state's approach shifts the tax burden from real estate to personal property and business income.
Oregon: No property tax on primary residences for some homeowners, but most pay property tax
Oregon's situation is more complex than the other four states. Oregon does not tax the first $10,000 of assessed home value for homeowners who have owned the same property for at least three years and meet income limits. For most homeowners, this means a significant reduction in property tax, but not elimination. Renters and new homeowners pay full property tax rates.
Oregon funds schools through income tax (which ranges from 4.75% to 9.9% depending on income) and sales tax (0% state rate, but local rates vary). The state's property tax reduction is tied to the Measure 50 law passed in 2000, which capped assessed value growth. Oregon homeowners typically pay lower property taxes than homeowners in neighboring states, but the state is not technically property-tax-free.
How these states fund schools and services without property tax
States without property tax must raise revenue through other sources. The methods vary widely, and the total tax burden on residents differs significantly from state to state.
| State | Primary Funding Sources | Income Tax | Sales Tax |
|---|---|---|---|
| Alaska | Oil and gas revenue, local sales tax | None | 0% state (local varies) |
| Delaware | Income tax, sales tax, corporate tax | 2.2%–5.75% | 6% |
| Montana | Income tax, local sales tax, resource tax | 1%–6.9% | 0% state (local varies) |
| New Hampshire | Business tax, vehicle property tax, interest/dividend tax | None on wages | None |
| Oregon | Income tax, local sales tax | 4.75%–9.9% | 0% state (local varies) |
A resident of Alaska or New Hampshire pays no income tax, which can offset the lack of property tax savings. A resident of Oregon or Delaware pays higher income tax to fund schools. Montana residents face a mix of income tax and local sales taxes. The total tax burden—property tax plus income tax plus sales tax—varies by state and by individual income level.
Comparing total tax burden across states
Choosing a state based on property tax alone can be misleading. A homeowner earning $60,000 per year in Oregon pays no property tax on the first $10,000 of home value but pays 9.9% income tax on wages. A homeowner earning the same amount in New Hampshire pays no income tax but may pay higher vehicle registration fees and business taxes if self-employed.
The total tax burden depends on your income, the value of your home, whether you own a vehicle, and whether you own a business. A retiree living on investment income in New Hampshire faces a 5% tax on dividends. A wage earner in Montana faces income tax but no sales tax. A high-income earner in Oregon faces the highest marginal income tax rate in the nation at 9.9%.
Before relocating for tax reasons, compare your specific situation across states. A tax professional or state revenue department can estimate your total tax burden in each state based on your income, assets, and family situation.
Frequently Asked Questions
Do I pay property tax on a vacation home in one of these states?
It depends on the state and the type of property. In Montana and Delaware, vacation homes and rental properties are taxed even though primary residences are not. In Alaska, it depends on whether the property is in an incorporated city or unincorporated area. In New Hampshire and Oregon, the exemptions explore only to primary residences, so a second home is taxed.
If I move to Alaska or New Hampshire, do I really pay no taxes at all?
No. Both states have no income tax and no property tax on real estate, but you will pay sales tax (in Alaska), vehicle registration fees (in New Hampshire), and other local taxes. Alaska has no state sales tax but cities impose local sales taxes. New Hampshire taxes vehicles and business equipment. Neither state is tax-free overall.
Can I deduct property taxes on my federal income tax if I live in one of these states?
If you pay no property tax, there is nothing to deduct. However, if you live in Montana, Delaware, or Oregon and do pay property tax on rental or commercial property, you can deduct those taxes on your federal return. State income taxes are also deductible in those states.
Is Oregon really a no-property-tax state?
Oregon is not technically property-tax-free. Most homeowners pay reduced property tax due to Measure 50, but the tax is not eliminated. New homeowners and renters pay full property tax rates. Oregon is sometimes listed among no-property-tax states because of the significant reduction, but it is more accurate to say Oregon has a property tax cap rather than no property tax.
If I own a business in one of these states, do I pay property tax on business equipment?
It varies by state. New Hampshire explicitly taxes business equipment as personal property. Montana taxes commercial buildings and land. Delaware taxes business property. Alaska and Oregon's rules depend on the type of business and property. Check with your state's revenue department or a tax professional for your specific situation.