Five states have no property tax on real estate
Five U.S. states impose no property tax on real estate: Alaska, Delaware, Montana, New Hampshire, and Wyoming. These states fund schools, roads, and local services through other revenue sources—usually sales tax, income tax, or both. If you own a home in one of these states, you will not receive a property tax bill from your county or municipality for that real estate.
The absence of property tax does not mean these states are tax-free overall. Alaska has no income tax or sales tax but charges property tax in some municipalities. Delaware has no sales tax but does tax income. New Hampshire taxes only interest and dividend income, not wages. Montana and Wyoming both have income tax. The trade-off varies by state, and your total tax burden depends on which taxes you actually pay.
Property tax rates in other states range from under 0.3% of home value annually (Hawaii, Louisiana) to over 2% (New Jersey, Illinois). Moving to a no-property-tax state can significantly reduce housing costs if you own real estate, but the savings may be offset by higher income or sales taxes depending on your income and spending.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Wyoming have no statewide property tax on residential real estate.
- These states fund public services through income tax, sales tax, or other revenue sources instead of property tax.
- No property tax does not mean no taxes—each of these states taxes income, sales, or both at rates that may offset the property tax savings.
- Some municipalities in Alaska do charge local property tax even though the state does not, so verify your specific location before moving.
- Your total tax burden depends on your income, spending, and which state taxes explore to your situation.
Alaska: No income tax, no sales tax, but some local property taxes
Alaska stands out as the only state with no income tax, no statewide sales tax, and no statewide property tax. However, this does not mean you pay zero property tax everywhere in Alaska. Some municipalities and boroughs—including Anchorage, Juneau, and Fairbanks—do charge local property tax on real estate. The rate varies by location, typically ranging from 0.84% to 1.19% of assessed home value.
If you live in an unincorporated area of Alaska or in a municipality that does not levy property tax, you will have no property tax bill. If you live in Anchorage or another taxing borough, you will pay local property tax despite the state having no statewide property tax. Before buying property in Alaska, confirm whether your specific municipality charges property tax.
Delaware: No sales tax, but income tax applies
Delaware has no statewide property tax and no sales tax, making it attractive for both homeowners and shoppers. However, Delaware does tax income at rates ranging from 2.2% to 5.75% depending on your bracket. The state also taxes corporate income, which is why many businesses incorporate in Delaware.
For homeowners, the lack of property tax is a significant advantage. For renters or people with investment income, Delaware's income tax becomes the primary state tax burden. If you work remotely and can choose where to live, Delaware's combination of no property tax and no sales tax may reduce your overall tax bill compared to states that tax both income and property.
Montana: Income tax present, but no property tax on primary residences
Montana has no property tax on real estate, but the state does tax income at rates from 2% to 6.9%. Montana also has a 3% sales tax. For homeowners, the elimination of property tax is the main benefit; renters and wage earners will pay income and sales tax like residents of most other states.
Montana's property tax exemption applies to all real estate, not just primary residences. This means investment properties, vacation homes, and commercial real estate are also exempt from property tax. The trade-off is that Montana's income tax is higher than some neighboring states, so your total tax burden will depend on your income level and how much you spend.
New Hampshire: Only interest and dividend income taxed
New Hampshire has no property tax, no income tax on wages, and no sales tax. The state does tax interest income and dividend income at 5%, which is why New Hampshire appeals to retirees living on investment returns and homeowners with wage income. If your income comes entirely from wages or a salary, you pay no state income tax in New Hampshire.
New Hampshire funds schools and local services through property tax at the municipal level and through taxes on business income and meals. However, residential property is exempt from property tax. This structure makes New Hampshire one of the most tax-friendly states for wage earners and homeowners, though it can be expensive for people living primarily on investment income.
Wyoming: No income tax, moderate property tax exemption
Wyoming has no state income tax and no property tax on real estate. The state funds services through sales tax (4% statewide, up to 6% with local additions), excise taxes, and mineral extraction taxes. For homeowners and wage earners, Wyoming's combination of no income tax and no property tax is a significant advantage.
Wyoming's sales tax is lower than many states, and the lack of income tax means your wages are not taxed by the state. The trade-off is that Wyoming has a higher cost of living in some areas and relies on sales tax, so people who spend more will pay more in state taxes overall. For high-income earners, Wyoming's lack of income tax can result in substantial savings.
How property tax savings compare to other state taxes
The five no-property-tax states fund services through different combinations of income tax, sales tax, and other revenue. Your actual tax burden depends on whether you earn wages, receive investment income, or spend heavily on taxable goods. A person earning $60,000 per year in wages will pay less total state tax in Wyoming or New Hampshire than in a state with both property tax and income tax. A person living on $60,000 in dividend income will pay more in New Hampshire (5% on dividends) than in Wyoming (no income tax).
To compare your potential tax burden, calculate your state income tax, sales tax on typical annual spending, and property tax in your current state. Then compare that total to the income tax, sales tax, and zero property tax in a no-property-tax state. The difference will show whether moving would reduce your taxes. Keep in mind that property values, cost of living, and housing markets vary significantly among these states, so tax savings may be offset by higher home prices or rent.
Frequently Asked Questions
Do I have to pay federal property tax if I live in a no-property-tax state?
No. Property tax is a state and local tax, not a federal tax. The federal government does not charge property tax on homes. You may deduct state and local property taxes on your federal income tax return if you itemize deductions, but you do not pay property tax to the federal government.
Can I deduct property taxes on my federal return if I live in Alaska, Delaware, Montana, New Hampshire, or Wyoming?
You cannot deduct property taxes you do not pay. However, if you live in a municipality in Alaska that does charge local property tax, you can deduct that amount. If you live in a no-property-tax state, you may deduct other state and local taxes (income tax or sales tax) up to $10,000 per year on your federal return.
Are property values higher in no-property-tax states because people want to avoid property tax?
Property values depend on many factors: job availability, climate, population growth, school quality, and local amenities. Some no-property-tax states have high property values (New Hampshire, parts of Alaska), while others have lower values (parts of Montana, Wyoming). The absence of property tax alone does not determine home prices.
If I rent instead of own, do I benefit from living in a no-property-tax state?
Renters do not pay property tax directly, but landlords do in states that charge it. In no-property-tax states, landlords have lower costs, which may be reflected in lower rent, though this is not may provide. Renters in no-property-tax states still pay income tax and sales tax like other residents, so the overall benefit depends on your income and spending.
Can I move to one of these states just to avoid property tax?
Yes, you can move to any state. However, most states require you to establish residency before you benefit from state tax treatment. Residency typically requires living in the state for at least part of the year and establishing ties like a driver's license, voter registration, or employment. If you own property in multiple states, you may owe property tax in the state where the property is located, regardless of where you live.