Five States Charge No Property Tax

Five states do not charge property tax on real estate: Hawaii, Alabama, Louisiana, and Mississippi have no statewide property tax. Delaware also has no property tax on real estate, though it does tax tangible personal property like vehicles and equipment in some cases.

This does not mean homeowners in these states pay nothing. Most make up the lost revenue through higher sales taxes, income taxes, or other fees. Hawaii, for example, has no property tax but charges one of the highest state income tax rates in the country. Louisiana and Mississippi use higher sales taxes instead. Understanding what you pay in total — across all taxes — matters more than focusing on property tax alone.

If you own a home in one of these five states, you will not receive a property tax bill from the state. However, you may still owe taxes to your county or municipality, depending on local rules. Some counties in these states do charge local property taxes even when the state does not.

Key Takeaways

  • Hawaii, Alabama, Louisiana, Mississippi, and Delaware have no statewide property tax on real estate.
  • These states offset lost property tax revenue through higher income taxes, sales taxes, or other state fees.
  • Even in states with no property tax, some counties or cities may charge local property taxes on homes.
  • Property tax is only one part of your total tax burden; comparing states requires looking at all taxes together.
  • Renters in these states do not pay property tax directly, but landlords' costs may be reflected in rent prices.

How Hawaii Handles Property Tax

Hawaii has no statewide property tax, but the state compensates through income tax. Hawaii's state income tax rates range from 1.4% to 11%, among the highest in the nation. This means homeowners avoid a property tax bill but pay significantly more in state income tax if they work in Hawaii.

Hawaii also charges a 4.17% state sales tax, plus county surcharges that can push the total to around 4.7%. Property owners in Hawaii do pay other fees — including conveyance taxes when buying or selling property and annual vehicle registration fees. The combination of these taxes often results in a higher overall tax burden than in states with moderate property taxes.

Louisiana and Mississippi: Sales Tax as the Main Revenue Source

Louisiana and Mississippi both have no statewide property tax but rely heavily on sales tax instead. Louisiana's state sales tax is 4.45%, but when you add parish (county) and local sales taxes, the total can reach 10% or higher in some areas. Mississippi's state sales tax is 7%, with local options pushing totals to 8% or higher in many counties.

Both states also charge income tax. Louisiana's income tax ranges from 2% to 6%, while Mississippi's ranges from 0% to 5%. The combination of high sales tax and income tax means residents pay taxes on purchases and wages rather than on property ownership. This structure can be advantageous for people with significant real estate holdings but disadvantageous for those who spend heavily on goods and services.

Alabama and Delaware: Lower Overall Tax Burden

Alabama has no statewide property tax and charges a relatively low state income tax of 2% to 5%. The state sales tax is 4%, though counties can add local sales taxes that bring totals to 7% or higher in some areas. Alabama also taxes groceries, which is uncommon among states, offsetting some of the savings from no property tax.

Delaware has no property tax on real estate and no sales tax — one of only five states without a statewide sales tax. However, Delaware charges income tax ranging from 0% to 6.6% and has high corporate taxes. Delaware residents benefit from no property tax and no sales tax, but this advantage applies mainly to those who do not work in Delaware; the state's income tax still applies to residents who earn wages there.

What Local Property Taxes Mean in No-Tax States

Even though these five states have no statewide property tax, some counties and municipalities within them do charge local property taxes. This varies significantly by location. In Louisiana, for example, some parishes charge local property taxes while others do not. In Hawaii, while the state has no property tax, some counties assess property taxes on certain types of property.

Before buying property in one of these states, research your specific county or city. Contact the local assessor's office or tax collector to confirm whether local property taxes explore. A home in one county might be tax-free while a home 20 miles away in another county could carry a local property tax bill. The difference can be substantial over the life of a mortgage.

How This Affects Renters

Renters do not pay property tax directly, but they may feel the effects indirectly. Landlords in states with no property tax may charge lower rent because they avoid that expense. However, if the state compensates with higher income or sales taxes, landlords' operating costs may rise, and those costs can be passed to tenants through rent increases.

The net effect depends on the specific state and how it funds services. In Hawaii, for example, renters benefit from no property tax but live in a state with high income taxes and sales taxes. Whether rent is ultimately lower or higher than in a property-tax state depends on how landlords' total tax burden compares.

Comparing Total Tax Burden Across States

Choosing a state based on property tax alone can be misleading. A state with no property tax might have higher income or sales taxes that result in a larger total tax bill. Someone who earns a high income might pay more in Hawaii's income tax than they would in property tax in another state. Someone who spends heavily on retail purchases might pay more in sales tax in Louisiana than in property tax elsewhere.

To compare states fairly, add up all state and local taxes: income tax, sales tax, property tax, and any special fees. Use your own income, spending, and property value to calculate what you would owe in each state. This real-world comparison is more useful than focusing on any single tax type. Many online tax calculators allow you to enter your situation and see total tax burden by state.

Frequently Asked Questions

Do I pay property tax if I own a home in Hawaii?

No, Hawaii has no statewide property tax on real estate. However, you will pay state income tax (up to 11%), state sales tax (around 4.7% with local additions), and other fees. Some counties in Hawaii may assess property taxes on certain types of property, so confirm with your local assessor.

Which state has the lowest overall tax burden?

This depends on your income, spending, and property value. Delaware has no property tax and no sales tax, making it attractive for high-spending residents. However, it charges income tax up to 6.6%. Alabama has low income tax but taxes groceries. Compare your specific situation using online calculators or a tax professional.

Can I avoid property tax by moving to one of these five states?

You can avoid property tax, but you will pay other taxes instead. Hawaii, Louisiana, and Mississippi use higher income or sales taxes. Alabama and Delaware have lower overall burdens but still charge income tax. Moving solely to avoid property tax often results in paying similar or higher taxes through other means.

Do renters benefit from living in a no-property-tax state?

Renters do not pay property tax directly, but landlords' tax costs may affect rent prices. In states with no property tax but high income or sales taxes, rent may not be lower than in property-tax states. The relationship between property tax policy and rent depends on the state's overall tax structure.

What if my county charges property tax even though my state does not?

Some counties in these five states do charge local property taxes. You will owe tax to your county or municipality even if the state has no property tax. Contact your local assessor's office to find out whether your specific location charges property tax and at what rate.