Five states charge no property tax at all

Five U.S. states have eliminated property tax entirely: Alaska, Delaware, Montana, New Hampshire, and Oregon. No homeowner in these states pays annual property tax to fund schools, roads, or local services through a property tax bill. Instead, these states fund government operations through other revenue sources—sales tax, income tax, business taxes, or a combination.

This does not mean property is free from all taxation. Most of these states use different taxes to replace the revenue. For example, Alaska has no state income tax and no property tax, but relies on oil revenue and sales tax. New Hampshire has no sales tax and no property tax, but taxes interest and dividend income. Understanding what your state taxes instead helps you see the full picture of what homeownership costs.

Key Takeaways

  • Alaska, Delaware, Montana, New Hampshire, and Oregon are the only five states with no property tax on residential real estate.
  • States without property tax fund schools and services through sales tax, income tax, business taxes, or other revenue sources instead.
  • No property tax does not mean no taxes—you may pay higher sales tax, income tax, or other levies in these states.
  • Property tax rates vary widely in states that do tax property, ranging from under 0.3% to over 2% of home value annually.

Alaska: No property tax, no state income tax

Alaska charges no property tax and no state income tax. The state funds schools, roads, and local services primarily through oil and gas revenue, federal funding, and a 0% to 7.5% sales tax that varies by municipality. Some boroughs (Alaska's equivalent of counties) add local sales taxes on top of the state rate.

Homeowners in Alaska do pay local assessments for specific services—water, sewer, or road maintenance—but these are not property taxes. You also pay federal property taxes if you own land in a national park or other federal area. The lack of property tax makes Alaska attractive to retirees and remote workers, though the cost of living and heating expenses offset some savings.

Delaware: No property tax on residential property

Delaware taxes commercial and industrial property but not residential property. Homeowners pay no annual property tax on their houses or land. The state funds education and services through income tax (ranging from 2.2% to 5.75%), sales tax (0%), and business taxes.

Delaware's lack of residential property tax is unusual because most states that avoid property tax also avoid income tax. This makes Delaware a rare middle ground. However, the state's income tax is higher than average, and property values in desirable areas near Philadelphia and the coast have risen accordingly. Renters do not benefit from the property tax exemption—landlords pass costs to tenants through rent.

Montana: No property tax on primary residences

Montana does not tax the primary residence of the owner, though it does tax rental properties, vacant land, and commercial real estate. Homeowners who live in their house year-round pay no property tax on that home. The state funds services through income tax (ranging from 1% to 6.9%), sales tax (0%), and property taxes on non-residential property.

This exemption applies only to your main home. If you own a cabin, investment property, or land you do not live on, Montana taxes that property. You must file a homeowner exemption form with your county assessor to claim the exemption on your primary residence. The form is straightforward but must be renewed if you move or sell.

New Hampshire: No property tax, no sales tax

New Hampshire has no property tax and no sales tax—a rare combination. The state funds schools and services through income tax on interest and dividend income (5%), business taxes, and federal funding. This makes New Hampshire attractive to people with modest incomes or those who earn wages rather than investment income.

The catch is that New Hampshire's education funding model relies heavily on local property wealth, which has created inequality between wealthy and poor school districts. The state has faced ongoing legal challenges about whether this system meets constitutional requirements for adequate school funding. Homeowners benefit from low taxes, but schools in less wealthy towns may have fewer resources.

Oregon: No property tax on primary residences over age 65

Oregon does not tax the primary residence of homeowners age 65 and older, provided their household income stays below a threshold (the limit changes yearly and is set by the state). Younger homeowners and those above the income limit pay property tax like most states. Oregon funds services through income tax (ranging from 4.75% to 9.9%), sales tax (0%), and property taxes on taxable properties.

This exemption is not automatic—you must file a claim with your county assessor and provide proof of age and income. The income limit is generous enough that many retirees may have access to, but it excludes working-age homeowners. Oregon's income tax is among the highest in the nation, which offsets some savings from the property tax exemption for older residents.

How property tax rates compare in other states

In states that do tax property, rates vary dramatically. Effective property tax rates—the percentage of home value you pay annually—range from under 0.3% in Hawaii and Alabama to over 2% in New Jersey and Illinois. A home worth $300,000 might cost $600 per year in property tax in a low-tax state but $6,000 per year in a high-tax state.

Property tax is calculated by multiplying your home's assessed value by the local tax rate, which is set by county or municipality. Even within a state, rates can differ significantly between towns. A house in one county might be taxed at 0.8%, while an identical house 20 miles away is taxed at 1.2%. This is why property tax is often called a "local tax"—your town and county set the rate, not the state.

What homeowners in no-tax states actually pay instead

The absence of property tax does not mean lower overall taxes. Alaska and New Hampshire have no income tax, so residents there may pay less total tax if they earn modest wages. Delaware and Montana have income taxes that offset the lack of property tax. Oregon's exemption applies only to seniors, so working-age homeowners still pay property tax.

When comparing states, look at the full tax picture: income tax rate, sales tax rate, property tax rate (if any), and any special taxes on utilities, vehicles, or business income. A state with no property tax but 9% sales tax may cost more than a state with 1.5% property tax and 5% sales tax, depending on how much you spend versus how much your home is worth. Use your own numbers—income, home value, spending habits—to calculate the real difference.

Frequently Asked Questions

Do I still have to pay property tax if I own land in a no-tax state?

It depends on the state and the type of property. Alaska, New Hampshire, and Delaware have no property tax on any residential real estate. Montana exempts only your primary residence, so rental properties and land are taxed. Oregon exempts only homes owned by people 65 and older. Check your specific state and property type to know for certain.

Can I move to one of these states just to avoid property tax?

You can move anywhere you want, but you must actually live there. States require you to establish residency—usually by living in the state for at least part of the year and registering to vote or getting a driver's license. You cannot claim a home as your primary residence in a no-tax state if you actually live elsewhere. Tax authorities investigate suspicious claims.

Are schools worse in states without property tax?

School quality varies within every state, but states without property tax do fund schools differently. Alaska and New Hampshire rely on state and federal funding rather than local property wealth, which can create more equal funding across districts. Montana and Oregon have mixed systems. The relationship between property tax and school quality is complex and depends on how each state allocates its overall budget.

What happens to my property tax bill if I move from a high-tax state to a no-tax state?

You stop paying property tax on your new home. However, you may pay higher income tax, sales tax, or other taxes instead. Calculate your total tax burden in both states using your actual income and spending to see whether you come out ahead. Do not assume no property tax means lower overall taxes.

Do renters benefit from no property tax in these states?

Renters do not directly benefit. Landlords own the property and would owe property tax if it existed. In states without property tax, landlords have lower costs, but rent is set by market demand, not by landlord costs. Rent in Alaska and New Hampshire is often high because of other factors—limited housing supply, high cost of living, or strong local economy—not because of property tax savings.