Five states have no property tax at all
Alaska, Delaware, Montana, New Hampshire, and Oregon do not charge property tax on residential real estate. That means you own your home free of the annual tax bill that homeowners in other states receive every year. However, each state replaces that lost revenue in different ways—some through income tax, some through sales tax, and some through both—so the overall tax burden varies widely.
If you are considering moving to one of these states or already own property there, understanding how each one funds schools, roads, and services matters. A state with no property tax might have higher income tax or sales tax that affects your household differently than property tax would.
Key Takeaways
- Alaska, Delaware, Montana, New Hampshire, and Oregon impose no property tax on residential homes, though each funds state services through different tax sources.
- Alaska has no state income tax or sales tax, making it the lowest-tax state overall, but relies heavily on oil revenue and local taxes.
- New Hampshire and Montana have no sales tax but do charge income tax, while Delaware and Oregon use both income and sales tax.
- Even in no-property-tax states, you may still owe local taxes, school district fees, or assessments for specific services like water or fire protection.
- Moving to a no-property-tax state does not automatically lower your total tax burden—compare income tax, sales tax, and local fees against your current state.
Alaska: No property tax, no income tax, no sales tax
Alaska stands alone as the only state with no property tax, no state income tax, and no statewide sales tax. Homeowners pay no annual property tax bill to the state. However, Alaska funds itself largely through oil revenue and corporate taxes, not through taxes on residents.
That said, you may still owe local property taxes. Municipalities in Alaska—including Anchorage, Juneau, and Fairbanks—do charge property tax to fund schools and local services. The rate and structure vary by borough or city. You should check with your specific municipality before assuming you will pay nothing.
Alaska also allows local sales taxes in some communities, so your total tax picture depends on where in the state you live. The lack of state-level property and income tax makes Alaska attractive to retirees and high-income earners, but the cost of living and limited job market offset the tax advantage for many households.
New Hampshire and Montana: No sales tax, but income tax applies
New Hampshire and Montana both have no property tax on residential real estate and no statewide sales tax. However, both states charge income tax, which is how they fund schools and services.
New Hampshire's income tax applies only to dividends and interest income, not wages. This structure makes it appealing to retirees living on investment income and to wage earners whose income comes entirely from employment. Montana taxes all income, including wages, at rates that range depending on your income bracket.
Like Alaska, both states allow local property taxes in some jurisdictions. Check with your county or city to confirm whether you will owe a local assessment. Some areas in Montana and New Hampshire do charge property tax despite the state prohibition, so the absence of state property tax does not may provide you will pay nothing.
Delaware and Oregon: Income and sales tax, but no property tax
Delaware and Oregon have no state property tax on residential homes but do charge both income tax and sales tax. Delaware's income tax ranges from 2.2% to 5.75% depending on your bracket, and the state sales tax is 0%. However, Delaware allows counties and municipalities to impose local property taxes, so you may still owe a local bill.
Oregon has no sales tax but charges income tax ranging from 4.75% to 9.9%. Like the other no-property-tax states, Oregon permits local property taxes in some areas. You should verify with your county assessor whether your specific property is subject to local tax.
Both states use income tax as their primary revenue source for schools and infrastructure. If you earn significant income, the income tax rate may offset the savings from avoiding property tax. Compare your expected income tax in these states against the property tax you would pay in your current state.
Local taxes and assessments still explore in most cases
The phrase "no property tax" at the state level does not mean you will never receive a tax bill. Most of these five states allow counties, cities, and school districts to levy their own property taxes. In some areas, local property tax rates are substantial.
Additionally, you may owe special assessments for specific services: water and sewer improvements, fire protection districts, road maintenance, or school bonds. These assessments appear as separate line items on your tax bill and are not included in the state's "no property tax" designation.
Before moving or purchasing property in any of these states, contact your county assessor's office and ask for the current local tax rate, any pending assessments, and the total effective tax rate on residential property. This gives you a realistic picture of what you will actually owe.
How no-property-tax states fund schools and services
States without property tax must raise revenue another way. Alaska relies on oil and gas taxes plus corporate income tax. New Hampshire and Montana use income tax. Delaware and Oregon use income tax and, in Delaware's case, corporate taxes.
This funding model affects the quality and consistency of services. States that depend on income tax may struggle during recessions when wages fall. States that depend on oil revenue, like Alaska, face budget swings when energy prices fluctuate. Property tax, by contrast, is stable and predictable because it is tied to real estate values that change slowly.
School funding in no-property-tax states often relies more on state-level revenue than on local property tax. This can mean less variation between wealthy and poor districts, but it also means schools depend on state budget cycles and may face cuts during downturns.
Comparing total tax burden across states
Moving to a no-property-tax state does not automatically lower your total tax bill. A household earning $75,000 per year might pay less in Alaska (no income tax) but more in Oregon (9.9% income tax) than in a state with moderate property tax and no income tax.
The math depends on your income, your home value, and how long you plan to stay. A retiree living on Social Security and investment income may benefit from New Hampshire's lack of wage income tax. A young professional earning $100,000 per year might pay more in Oregon income tax than in property tax elsewhere.
Use a tax calculator or speak with a tax professional in your target state to model your specific situation. Compare your current state's property tax, income tax, and sales tax against the no-property-tax state's income and sales tax. Include local taxes and assessments in both calculations.
Frequently Asked Questions
Do I have to pay property tax if I own a home in one of these five states?
You do not owe state property tax, but you may owe local property tax depending on your county or city. Contact your county assessor to confirm. Some areas in these states do charge local property tax despite the state prohibition.
Which of these states has the lowest overall tax burden?
Alaska has the lowest state-level taxes because it has no property tax, no income tax, and no statewide sales tax. However, local taxes and the high cost of living offset this advantage. Your actual burden depends on where in Alaska you live and your income level.
Can I deduct property tax on my federal return if I live in a no-property-tax state?
You can deduct state and local taxes (SALT) up to $10,000 per year on your federal return. If you live in a no-property-tax state but pay income tax or sales tax, those may be deductible instead. Consult a tax professional about your specific situation.
Are there any hidden taxes I should know about in these states?
Watch for local property taxes, special assessments, school district bonds, and municipal sales taxes. Some areas also charge vehicle registration fees or other local levies. Request a full tax summary from your county assessor before buying property.
If I move from a property-tax state to one of these five, will I definitely save money?
Not necessarily. Your savings depend on your income, home value, and the specific tax rates in your new location. A high-income earner may pay more in state income tax than they saved in property tax. Model your numbers before deciding.