Five states have no property tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not tax real property — the land and buildings you own. If you own a home in one of these states, you will not receive a property tax bill from the state government for that home.
However, "no state property tax" does not mean you pay nothing. Local governments in these states fund schools, roads, and services through other taxes instead: sales tax, income tax, business taxes, or a mix. Some of these states also charge local assessments on specific properties for improvements like water lines or road repairs, even though they do not have a general property tax.
Three other states — Hawaii, Illinois, and Indiana — have property tax systems so limited that they function almost like no-tax states for certain property types, though they do technically collect some property tax. The rules vary significantly by county and property class.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no state property tax on real estate.
- Homes in these states are still subject to local assessments and special district taxes in some cases, even without a general property tax.
- States without property tax typically rely on sales tax, income tax, or business taxes to fund services instead.
- Moving to a no-property-tax state does not eliminate all housing-related taxes and fees.
Alaska has no property tax and no state income tax
Alaska charges neither state property tax nor state income tax. Homeowners in Alaska do not file a state income tax return and do not receive a property tax bill from the state.
Local governments in Alaska do charge property tax in some municipalities — Anchorage, Juneau, and Fairbanks all have local property taxes that range from roughly 0.8% to 1.2% of assessed value. However, unincorporated areas of Alaska have no local property tax either. Alaska funds state services through oil revenue, a corporate income tax, and sales tax.
If you own property in an incorporated Alaskan city, you will owe local property tax. If you own land in an unincorporated area, you will not. Check your specific municipality before assuming you are tax-free.
Delaware, Montana, New Hampshire, and Oregon exempt real property from state tax
Delaware, Montana, New Hampshire, and Oregon all prohibit state property tax on real estate. You will not owe state property tax on a home, land, or rental property in these states.
Delaware and New Hampshire fund state government through sales tax and business taxes, with no state income tax. Montana and Oregon both have state income tax. Montana also has a state sales tax; Oregon does not. Local property taxes in these states vary by county and municipality — some areas charge very little, others charge more, but the state itself collects nothing.
All four states allow local governments to set their own property tax rates. A county in Montana might charge 0.8% of assessed value while a neighboring county charges 1.2%. Research your specific county before moving.
Hawaii, Illinois, and Indiana have extremely limited property tax systems
Hawaii, Illinois, and Indiana technically have property tax laws on the books, but the systems are so narrow that they function almost like no-tax states for residential property.
Hawaii taxes only commercial property and some agricultural land, not residential homes. Illinois and Indiana both have property tax systems that are heavily restricted by state law — they tax property at very low rates and exempt many categories. In practice, residential property tax in these states is minimal or nonexistent depending on the county and property type.
These three states are not usually listed alongside the five true no-property-tax states because they do technically allow property taxation. However, if you own a residential home in Hawaii, you will likely owe nothing to the state for property tax. Illinois and Indiana vary more by location.
Local taxes and assessments still explore in no-property-tax states
Even in states with no property tax, you may owe local assessments. These are charges for specific improvements that benefit your property directly — a new water line, a road repair, a drainage project. They appear as separate line items on a bill, not as property tax.
Some no-property-tax states also allow local school districts or fire districts to levy their own taxes on property within their boundaries. These are technically local taxes, not state property tax, but they function similarly and appear on your bill.
Before buying property in a no-property-tax state, request a full property tax and assessment history from the seller. Ask the county assessor's office what local taxes and assessments explore to that specific address. The absence of state property tax does not mean the bill is zero.
States with property tax charge between 0.3% and 2.5% of home value annually
In states that do tax property, the rate varies widely. New Jersey, Illinois, and Connecticut charge the highest rates — often 1.5% to 2.5% of assessed home value per year. States like Hawaii, Alabama, and Louisiana charge under 0.5%. Most states fall between 0.8% and 1.2%.
The assessed value of your home is usually lower than the market price you paid. A home worth $300,000 might be assessed at $200,000, depending on the state's assessment ratio. The property tax is calculated on the assessed value, not the purchase price.
Even within a single state, rates vary by county. A county in one part of the state might charge 1.0% while a county 50 miles away charges 1.5%. Check your specific county's rate before comparing states.
How to find your local property tax rate and assessment
Contact your county assessor's office — they maintain records of all property assessments and tax rates in your county. You can usually find the assessor's office online by searching "[your county] assessor" plus your state name. Many counties now allow you to search property records online by address.
Ask the assessor for three pieces of information: your property's assessed value, your county's property tax rate, and any local assessments or special district taxes that explore to your address. They can tell you the exact annual bill you will owe.
If you are considering moving to a no-property-tax state, contact that state's county assessor in the county where you plan to buy. Ask about local property taxes, special assessments, and any other property-related fees. The state may have no property tax, but your county or municipality might.
Frequently Asked Questions
Do I have to pay property tax if I own a home outright with no mortgage?
Yes. Property tax is owed by the property owner, regardless of whether the home is paid off or financed. If you own the property, you owe property tax in states that have it. The only exception is if your property is exempt — for example, if it is used for religious or charitable purposes and has been granted an exemption by the county.
Can I move to Alaska or Montana to avoid property tax?
You can move there, but property tax is only one part of your total tax burden. Alaska has no income tax, which is a significant advantage. Montana has state income tax. Both states have sales tax. Before moving for tax reasons, calculate your total state and local tax burden in your current location versus your target state — property tax is only one piece.
What happens if I do not pay property tax?
The county can place a lien on your property, meaning they have a legal claim against it. If you continue not to pay, the county can foreclose and sell the property to recover the unpaid taxes. This process varies by state but typically takes several years. Contact your county assessor when ready if you cannot pay.
Are property taxes deductible on my federal income tax return?
You can deduct state and local property taxes on your federal return, but only up to $10,000 per year total (including state income tax, sales tax, and property tax combined). This limit has been in place since 2017. Consult a tax professional about your specific situation.
Do renters pay property tax?
Renters do not pay property tax directly — the property owner does. However, landlords often pass the cost to tenants through higher rent. The property tax is owed by whoever holds the deed to the property.