States That Do Not Charge Property Tax
Only one state has no property tax on real estate: Hawaii. Hawaii abolished its property tax system decades ago and funds state and local government through other revenue sources, primarily the general excise tax and income tax.
However, the practical picture is more complicated. Several other states have extremely low effective property tax rates or exempt certain categories of property from taxation. If you are considering a move based on property tax burden, you need to understand what "no property tax" actually means in each case and what other taxes you will pay instead.
No state has zero taxation on all forms of property. Even Hawaii taxes business equipment, vehicles, and intangible property. The question is whether residential real estate — the house or land you live on — faces an annual property tax bill.
Key Takeaways
- Hawaii is the only state with no property tax on residential real estate, though it taxes business property and charges a general excise tax on most purchases.
- Several states including South Dakota, Tennessee, and Wyoming have no income tax but do charge property tax, so your total tax burden depends on your income level.
- Some states exempt certain property types — agricultural land, homesteads, or senior properties — from property tax, but this is not the same as having no property tax statewide.
- Moving to a low-tax state for property tax reasons requires comparing all state and local taxes together, not property tax alone.
Hawaii's Property Tax System and What You Pay Instead
Hawaii does not assess an annual property tax on the value of your home or land. This is unique among all fifty states. However, Hawaii residents and property owners pay other substantial taxes that offset this advantage.
The general excise tax in Hawaii is 4.5 percent on most goods and services, and some counties add an additional 0.5 percent. This applies to groceries, utilities, rent, and most everyday purchases. Over time, this tax can exceed what you would pay in property tax in many mainland states.
Hawaii also charges state income tax, with rates ranging from 1.4 percent to 11 percent depending on income level. Combined with the general excise tax, your overall tax burden in Hawaii may not be lower than in states with moderate property tax rates but no income tax.
Property owners in Hawaii do pay a small annual tax called the real property tax on business property, agricultural land, and certain other classifications, but owner-occupied residential homes are exempt.
States With Very Low Property Tax Rates
If you are looking for states where property tax burden is minimal, several states have effective property tax rates below 0.5 percent of home value. These include Alabama, Louisiana, Mississippi, and West Virginia. While these states do charge property tax, the annual bill is substantially lower than in high-tax states like New Jersey, Illinois, or Connecticut.
The catch is that many of these low-property-tax states make up the difference with other taxes. Louisiana and Mississippi charge state income tax. Alabama charges income tax on wages. West Virginia charges income tax and has a higher sales tax than the national average.
If you have no income or very low income, a low-property-tax state may genuinely save you money. If you earn a substantial salary, the income tax in these states may offset the property tax savings.
States With No Income Tax (But Property Tax Still Applies)
Nine states have no state income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, Wyoming, and New Hampshire (which taxes only dividends and interest, not wages). However, all of these states except Alaska and Nevada do charge property tax on real estate.
If you earn income and want to avoid income tax, these nine states are worth considering. But you will still receive a property tax bill each year. The property tax rate varies widely: Texas has an effective rate around 1.6 percent, while New Hampshire's is closer to 2.1 percent.
Alaska and Nevada are the only states with neither income tax nor a significant statewide property tax. However, both allow local governments to impose property taxes, and many municipalities do. You need to check the specific city or county where you plan to live.
Homestead Exemptions and Property Tax Breaks
Many states offer homestead exemptions that reduce or eliminate property tax for owner-occupied homes, particularly for seniors, disabled homeowners, or low-income residents. These are not the same as having no property tax statewide, but they can substantially lower your bill.
Florida, for example, allows homeowners to exempt up to $50,000 of their home's assessed value from property tax. Texas offers homestead exemptions that vary by county. Some states limit exemptions to seniors over a certain age or to households below an income threshold.
If you are retired, disabled, or have limited income, research whether your target state offers exemptions you would may have access to for. These can make a significant difference in your annual tax bill, even in states with moderate property tax rates.
Agricultural and Business Property Exemptions
Some states exempt agricultural land or business property from property tax, or tax them at a much lower rate than residential property. This is not the same as having no property tax on your home, but it matters if you own a farm, rental property, or business real estate.
Texas, for instance, taxes agricultural land at a lower rate than residential property if it is actively used for farming or ranching. Some states exempt property used for religious, educational, or charitable purposes. These exemptions are typically narrow and require documentation that your property meets the definition.
If you own property that might may have access to for an exemption, contact your county assessor's office before making a move decision. The exemption may not explore to all property types or may require annual recertification.
How to Compare Your Total Tax Burden by State
Deciding whether to move based on property tax requires looking at your complete tax picture, not property tax alone. Create a straightforward comparison using your actual income, home value, and spending patterns.
For each state you are considering, calculate: state income tax on your expected income, property tax on a home at your target price point, sales tax on your typical annual spending, and any local taxes or fees. Many state tax department websites have calculators that estimate income tax. Your county assessor's office can estimate property tax. Sales tax rates are published by each state.
The result will show you which state actually costs less for your specific situation. A state with no property tax may cost more overall if you have high income. A state with high property tax but no income tax may cost less if you earn substantial wages.
Frequently Asked Questions
Does Hawaii really have no property tax at all?
Hawaii has no property tax on owner-occupied residential real estate. However, it does tax business property, agricultural land, and charges a 4.5 percent general excise tax on most purchases plus state income tax. Your total tax bill in Hawaii may not be lower than in other states.
If I move to a state with no income tax, do I still pay property tax?
Yes, with two exceptions. Alaska and Nevada have no state income tax and no significant statewide property tax, though local governments in both states may impose property taxes. All other no-income-tax states charge property tax on real estate.
Can I get my property tax reduced if I am retired or disabled?
Many states offer homestead exemptions for seniors, disabled homeowners, or low-income residents. These reduce the assessed value of your home or eliminate property tax entirely. Requirements vary by state and county. Contact your county assessor to learn what you may may have access to for.
What is the difference between a homestead exemption and having no property tax?
A homestead exemption reduces your property tax bill by excluding part of your home's value from taxation. You still pay property tax on the remaining value. Having no property tax means you receive no annual property tax bill at all. Only Hawaii has no property tax; most other states use exemptions to lower bills for specific groups.
Should I move to a low-property-tax state to save money?
Not automatically. Compare your total state and local taxes — income tax, property tax, sales tax, and any other fees — using your actual income and spending. A state with low property tax may have high income tax that costs you more overall. Use your state's tax calculator or contact a tax professional to compare your specific situation.