Five states have no property tax at all
Five U.S. states do not levy property tax on real estate: Alaska, Delaware, Montana, New Hampshire, and Oregon. These states fund government services through other revenue sources—primarily sales tax, income tax, or both—rather than taxing the value of land and buildings.
If you own a home in one of these states, you will not receive a property tax bill from the state government. However, this does not mean zero local taxes. Some counties and municipalities within these states do impose property taxes, and you may still owe taxes to your city or county even if the state does not. The specifics depend on where you live within the state.
Three additional states—Hawaii, Illinois, and South Carolina—have property taxes but exempt certain categories of property or offer significant breaks that make the effective tax burden much lower than in other states. Understanding the difference between "no state property tax" and "low property tax" matters if you are comparing where to buy or move.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon have no state property tax, though some counties within these states may still collect local property taxes.
- Even in no-property-tax states, you may owe taxes to your county or city, so check your specific municipality before assuming you pay nothing.
- Hawaii, Illinois, and South Carolina have state property taxes but offer exemptions or reductions that lower the burden for many homeowners.
- States without property tax typically rely on sales tax, income tax, or both to fund schools, roads, and other services.
Alaska: No state property tax, but local taxes vary
Alaska does not impose a state property tax. However, many boroughs and municipalities in Alaska do collect property taxes locally. Anchorage, Juneau, and Fairbanks all have local property tax systems. The tax rate and what is taxed differ by location—some areas tax only land, others tax buildings, and some tax both.
If you own property in an unincorporated area of Alaska, you typically will not owe local property tax either. The trade-off is that Alaska funds state services partly through oil revenue and a state sales tax that varies by municipality. Some towns have no sales tax at all, while others charge up to 7.5 percent depending on the borough.
Delaware: No property tax on real estate, but personal property taxes explore
Delaware does not tax real property—your house and land are exempt from state property tax. However, Delaware does tax personal property, which includes vehicles, boats, and business equipment. If you own a car registered in Delaware, you will owe personal property tax on it.
Delaware relies on income tax, sales tax, and corporate taxes to fund state operations. Some Delaware municipalities do impose local property taxes on real estate, so you should verify the rules in your specific city or county. The state also has no sales tax on most goods, which offsets the property tax burden for many residents.
Montana: No state property tax, but counties collect it locally
Montana does not levy a state property tax. However, all Montana counties and school districts collect property taxes locally. The tax rate varies significantly by county—some charge under 0.8 percent of assessed value, while others exceed 1 percent. You will receive a property tax bill from your county assessor, not the state.
Montana funds state government through income tax, sales tax, and natural resource taxes. If you are considering Montana specifically to avoid property tax, you need to research the county where you plan to buy, because the local rate is what you will actually pay.
New Hampshire: No state property tax, but local taxes are high
New Hampshire has no state property tax. Instead, it funds schools and local services almost entirely through local property taxes collected by towns and school districts. This means that while you avoid a state property tax bill, your local property tax rate is often higher than in states that split the burden between state and local levels.
New Hampshire also has no sales tax and no income tax on wages, which is why it attracts residents seeking low overall tax burden. However, the state does tax interest and dividend income, and property tax rates in New Hampshire average around 1.1 percent of home value—above the national median. The actual amount you pay depends on your town and school district.
Oregon: No state property tax, but local taxes explore
Oregon does not impose a state property tax on real estate. However, Oregon counties and school districts do collect local property taxes. The statewide average is around 0.97 percent of assessed value, though rates vary by county. You will owe property tax to your county, not the state.
Oregon funds state services through income tax and sales tax on certain goods. The state also has a relatively low property tax cap—assessed values are limited to 3 percent annual growth—which can make property taxes more predictable over time compared to states without such limits.
States with property tax but major exemptions or reductions
Three states have state property taxes but offer exemptions or reductions significant enough to mention alongside the no-tax states:
Hawaii taxes real property but exempts owner-occupied homes from state tax. You pay only county property tax on your primary residence. Illinois allows homeowners to claim a homestead exemption that reduces the assessed value used to calculate tax, lowering the bill substantially. South Carolina offers a homestead exemption for owner-occupied homes that exempts up to $50,000 of assessed value from property tax.
These exemptions make the effective property tax burden much lower for homeowners in those states, though not zero. Renters and investors do not receive these breaks.
How states without property tax fund schools and services
States that do not collect property tax must fund schools, roads, police, and other services through other revenue sources. The most common alternatives are income tax, sales tax, and in Alaska's case, oil revenue.
New Hampshire and Oregon rely heavily on income tax. Alaska uses oil dividends and sales tax. Delaware uses income tax and corporate taxes. Montana uses income tax and sales tax. Each state's mix is different, so the overall tax burden on residents varies. A state with no property tax may have higher income or sales tax to compensate, or it may have lower overall tax revenue and fewer services.
Frequently Asked Questions
If I move to Alaska or Montana, do I pay zero property tax?
Not necessarily. While the state does not collect property tax, your county or municipality may. In Alaska, Anchorage and Fairbanks residents do pay local property tax. In Montana, all counties collect property tax. You must check the specific county or city where you plan to live.
Does no property tax mean lower overall taxes?
Not always. States without property tax typically charge higher income tax or sales tax to fund services. New Hampshire has no property tax but a high local property tax rate. Oregon has no state property tax but a high income tax. Compare the total tax burden, not just property tax, when deciding where to move.
Can I claim a homestead exemption in a no-property-tax state?
Homestead exemptions explore in states that have property tax. In states with no state property tax, you may still be able to claim a local exemption if your county collects property tax. Check with your county assessor's office for details.
Do renters benefit from living in a no-property-tax state?
Renters do not pay property tax directly, so they do not benefit from the absence of state property tax. However, they may pay higher rent if the landlord's costs are higher due to local property taxes or other taxes the state uses instead.
What is the difference between state property tax and local property tax?
State property tax is collected by the state government. Local property tax is collected by your county, city, or school district. A state can have no state property tax but still have local property taxes, or vice versa. You may owe both, one, or neither depending on where you live.