Five States Charge No Property Tax

Five states do not charge property tax on real estate: Hawaii, Alabama, Louisiana, and Delaware have no statewide property tax. Wyoming also has no property tax. However, "no property tax" does not mean no housing costs — these states fund schools and services through other taxes, and some charge local assessments or fees that function similarly to property tax.

The absence of property tax does not automatically make these states cheaper to live in. Hawaii has high income tax and a general excise tax that applies to most purchases. Louisiana and Delaware use sales tax and income tax instead. Wyoming has no income tax but charges sales tax. Alabama has both income and sales tax. Before moving for tax reasons, compare the total tax burden across income, sales, and other levies in your target state.

Some states that do charge property tax offer significant exemptions — for example, Florida and Texas have no state income tax but do tax property. Understanding what you will actually pay requires looking at the full picture in your specific situation, not just the presence or absence of one tax type.

Key Takeaways

  • Hawaii, Alabama, Louisiana, Delaware, and Wyoming impose no statewide property tax on real estate.
  • States without property tax typically rely on income tax, sales tax, or other revenue sources, so total tax burden varies widely.
  • Some states without property tax still charge local assessments, fees, or special district taxes that function like property tax.
  • Moving to a no-property-tax state does not may provide lower overall taxes — compare income tax, sales tax, and other levies before deciding.

How These Five States Fund Schools and Services

States that do not collect property tax must fund public schools, roads, and local government through alternative revenue. Hawaii relies heavily on income tax, general excise tax (a tax on most business transactions), and tourism-related taxes. The state's income tax rates range from 1.4% to 11%, depending on income level.

Alabama and Louisiana both use income tax and sales tax. Alabama's income tax ranges from 2% to 5%, and the state sales tax is 4%, though local jurisdictions can add up to 7.5% more. Louisiana's income tax ranges from 2% to 6%, with a state sales tax of 4% plus local additions that can reach 10.45% in some parishes.

Delaware has no sales tax but charges income tax ranging from 0% to 6.6% depending on income level. Wyoming stands alone with no income tax and no property tax — it funds operations through a 4% sales tax, excise taxes on fuel and alcohol, and mineral extraction taxes.

Local Assessments and Fees That Replace Property Tax

Even in states without statewide property tax, you may pay annual charges that function like property tax. Hawaii assesses an annual land tax on some properties, though rates are low. Louisiana allows parishes (counties) to levy property taxes in some cases, so the absence of state property tax does not may provide zero property-based charges.

Delaware permits counties to assess property taxes on real estate, meaning homeowners in some Delaware counties do pay property tax despite the state having no statewide property tax. Always check your specific county or parish, not just the state law.

Wyoming has no property tax statewide and no county property tax, making it genuinely property-tax-free. However, special districts — for water, fire protection, or other services — may assess fees on property owners. These are typically much smaller than traditional property taxes but are worth confirming with your local assessor before purchasing.

Comparing Total Tax Burden Across States

A state with no property tax may have higher income or sales tax that costs you more overall. For example, Hawaii's combined state and local sales tax can reach 4.5%, and income tax is steep. A household earning $75,000 annually pays roughly 6% to 8% in Hawaii state income tax alone, plus sales tax on purchases.

Wyoming's lack of income tax is a significant advantage for high earners, but the 4% sales tax applies to most purchases, including groceries in some cases. A family spending $50,000 annually on taxable goods pays $2,000 in sales tax, which compounds over time.

Alabama and Louisiana offer lower income tax rates than Hawaii but higher sales taxes, especially when local additions are included. A retiree living on investment income might benefit from Alabama's lower income tax, while a wage earner in a high-tax bracket might prefer Wyoming's zero income tax despite the sales tax.

States That Tax Property But Offer Major Exemptions

If you are considering a move primarily to avoid property tax, also research states that do tax property but offer substantial exemptions. Florida and Texas have no state income tax and relatively low effective property tax rates in many counties. Florida's average effective property tax rate is around 0.83%, and Texas averages 1.8%, both lower than the national average of 1.1%.

South Dakota and Nevada also have no income tax. South Dakota has property tax but no sales tax on groceries, and Nevada has no income tax with moderate property tax rates. These states may offer a better overall tax picture than the five with zero property tax, depending on your income and spending patterns.

What to Verify Before Moving

Do not assume a state's tax code applies uniformly across all counties. Louisiana parishes, Delaware counties, and even Wyoming special districts can impose their own charges. Contact the assessor's office in the specific county or parish where you plan to buy to confirm what you will actually pay.

Request a property tax estimate from the local assessor and ask about any special district fees, homestead exemptions, or other deductions. Ask whether the state or county offers exemptions for seniors, veterans, or disabled homeowners — these can significantly reduce your annual bill.

Calculate your estimated total state and local tax burden using your actual income, expected spending, and the property value you are considering. Many state tax websites offer calculators, or you can contact the state revenue department directly. This step takes 30 minutes and can save thousands of dollars in unexpected costs.

Frequently Asked Questions

Do any states have zero property tax and zero income tax?

Wyoming is the only state with no property tax and no state income tax. However, it charges a 4% sales tax and excise taxes on fuel and alcohol. No state has eliminated all major taxes.

Can I avoid property tax by moving to Hawaii, Alabama, Louisiana, Delaware, or Wyoming?

You will avoid statewide property tax, but you may still pay local assessments, special district fees, or county-level property taxes depending on your exact location. Always verify with your county or parish assessor before purchasing property.

Is Hawaii cheaper to live in than states with property tax?

No. Hawaii's income tax and general excise tax are high, and the cost of living is among the highest in the nation. The absence of property tax is offset by other expenses. Compare your total tax burden and living costs before moving.

What if I am retired and living on investment income?

States without income tax, like Wyoming, may offer significant savings if your income comes from investments, pensions, or Social Security. However, sales tax and other levies still explore. Run the numbers for your specific income sources in your target state.

Are property tax exemptions available in these five states?

Exemptions vary. Some states offer breaks for seniors, veterans, or disabled homeowners, but the details differ by state and county. Contact your state's revenue department or local assessor to learn what exemptions you might may have access to for.