Five states have no property tax at all
Five U.S. states do not impose property tax on real estate: Alaska, Delaware, Montana, New Hampshire, and Oregon. However, the way each state replaces that revenue differs significantly. Alaska has no state income tax either. Delaware taxes property transfers but not ongoing ownership. New Hampshire and Oregon both rely on income tax instead. Montana taxes property transfers and has a state income tax. Understanding which state you live in and how it funds services is the first step to knowing what you actually owe.
Property tax is how most states fund schools, roads, and local services. When a state does not collect property tax, it must raise money another way—usually through income tax, sales tax, or both. This matters because the total tax burden on your household might be higher, lower, or about the same as a state that uses property tax, depending on how much you earn and spend.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon do not tax the ongoing ownership of residential property.
- Each of these states funds schools and services through different tax sources: income tax, sales tax, or transfer taxes.
- Moving to a no-property-tax state does not automatically lower your total tax burden, because income or sales taxes may be higher.
- Local governments in these states still charge fees for services like water, sewer, and trash collection, which can resemble property tax bills.
Alaska: No property tax and no state income tax
Alaska is the only state with neither property tax nor state income tax. The state funds itself through oil revenue, a corporate income tax, and sales tax. Most Alaska municipalities do not charge local property tax either, though a few small towns do—so verify with your local assessor before assuming you owe nothing.
Because Alaska has no income tax, residents do not file a state return. The trade-off is a higher sales tax in many areas (some municipalities charge 7.5% or more) and limited public services in rural regions. If you own property in Alaska, you will still receive bills for utilities, water, sewer, and trash—these are not property tax but they are mandatory costs tied to the property.
Delaware: No property tax on primary residences
Delaware does not tax the ongoing ownership of residential property, but it does tax the transfer of property when you buy or sell. The transfer tax ranges from 1.5% to 3.5% of the sale price, depending on the county and the type of property. This means you pay tax once, at purchase, rather than every year.
Delaware funds schools and services through income tax (which ranges from 2.2% to 5.75% depending on income), sales tax (6%), and corporate taxes. If you own a home in Delaware, you will not receive an annual property tax bill, but you will pay the transfer tax when you buy and when you sell. Commercial property and rental properties are taxed differently—check with the Delaware Division of Revenue if you own investment real estate.
Montana: Property transfer tax instead of annual property tax
Montana does not charge annual property tax on residential real estate, but it does tax the transfer of property at 0.84% of the sale price. Like Delaware, you pay once at purchase rather than yearly. Montana also collects state income tax (ranging from 1% to 6.9% depending on income) and sales tax (0% state rate, but local rates vary from 0% to 3%).
Montana's approach means your property costs are front-loaded at purchase. If you plan to stay in your home for many years, this can be cheaper than annual property tax in other states. However, if you sell frequently or own investment property, the transfer tax adds up. Rental properties and commercial real estate have different rules—contact the Montana Department of Revenue for specifics on your situation.
New Hampshire: No property tax, but high income tax on dividends and interest
New Hampshire does not tax property ownership, but it does tax income from dividends, interest, and capital gains at 5%. This is unusual: most states that lack property tax use broad income tax or sales tax. New Hampshire has no sales tax, which keeps consumer costs low but means the state relies heavily on income tax and property-related fees.
If you own a home in New Hampshire, you will not pay annual property tax, but you will pay for utilities, water, sewer, and trash separately. If you have investment income or retirement accounts that generate dividends or interest, you will owe New Hampshire tax on that income. Wages and salaries are not taxed. This structure benefits wage earners but can be costly for retirees living on investment income.
Oregon: No property tax on primary residences for some owners
Oregon's property tax situation is more complex than the other four states. Oregon does tax property, but it offers a property tax deferral program for homeowners age 62 or older with household income below a certain threshold (which changes yearly). may be able to access seniors can defer property tax payments until the property is sold or transferred. This is not the same as having no property tax—the tax is owed, just delayed.
For all other homeowners, Oregon charges property tax. Oregon has state income tax (ranging from 4.75% to 9.9% depending on income) and no sales tax. If you are under 62 or above the income limit, you will owe annual property tax like most states. If you are a may have access to senior, you can defer those payments. Contact the Oregon Department of Revenue or your county assessor to learn whether you meet the requirements.
How these states fund schools and services without property tax
Every state must fund schools, roads, police, and other services. The five no-property-tax states do this through a mix of income tax, sales tax, transfer tax, and in Alaska's case, oil revenue. The table below shows the main funding sources for each:
| State | Income Tax | Sales Tax | Transfer Tax | Other |
|---|---|---|---|---|
| Alaska | No | Yes (varies by municipality) | No | Oil revenue, corporate tax |
| Delaware | Yes (2.2%–5.75%) | Yes (6%) | Yes (1.5%–3.5%) | Corporate tax |
| Montana | Yes (1%–6.9%) | Yes (0%–3% local) | Yes (0.84%) | None |
| New Hampshire | Yes (5% on dividends/interest only) | No | No | Utility tax, business tax |
| Oregon | Yes (4.75%–9.9%) | No | No | Corporate tax, estate tax |
The total tax burden depends on your personal situation. A high earner in Oregon or New Hampshire may pay more in income tax than they would in property tax in another state. A retiree living on savings in New Hampshire may pay less overall. A frequent home buyer in Montana or Delaware will pay more in transfer tax than someone who buys once and stays put. Compare your own income, spending, and plans against the tax rates in any state you are considering.
Frequently Asked Questions
If I move to one of these states, do I stop paying property tax when ready?
Yes, once you own property in a no-property-tax state, you do not owe annual property tax on that property going forward. However, you may owe a transfer tax when you buy (in Delaware, Montana, or Oregon). You will still owe income tax if the state has one, and you will still pay utilities and local service fees separately.
Do I have to pay property tax on a rental property in these states?
Rules for rental and commercial property vary by state. Delaware, Montana, and Oregon do tax rental properties. Alaska generally does not. Contact your state's revenue department or county assessor with details about your specific property to confirm what you owe.
Are property taxes really zero, or are they hidden in other fees?
Property tax itself is zero in these five states, but you will pay other mandatory costs tied to the property: utilities, water, sewer, trash collection, and sometimes local improvement districts. These are not property tax, but they are real expenses. Additionally, you may owe income tax or sales tax depending on the state.
Which of these states has the lowest overall tax burden?
That depends on your income, spending, and life stage. Alaska has the lowest burden for high earners with no investment income. New Hampshire favors wage earners over retirees. Oregon and Delaware favor people who buy a home once and stay. Montana works well for long-term homeowners with moderate income. Calculate your own situation using each state's tax rates before deciding.
Can I deduct property taxes on my federal return if I live in one of these states?
No, because you do not pay property tax. However, you may be able to deduct state income tax or sales tax (up to $10,000 total) on your federal return. Consult a tax professional about your specific situation.