Five states collect no property tax on real estate
Hawaii, Alabama, Louisiana, and Delaware do not impose a statewide property tax. Wyoming also has no property tax. These five states fund government operations through other revenue sources: sales tax, income tax, business taxes, or a combination. If you own a home in one of these states, you will not receive a property tax bill from the state government.
This does not mean property owners pay nothing. Most of these states charge higher sales taxes or income taxes to make up the difference. Some also charge local property taxes in certain counties or municipalities, so the absence of a state property tax does not automatically mean your property is tax-free. You still need to check your county and city rules.
The reason these states have no property tax is historical and political. Some adopted this policy decades ago and have kept it; others rely on tourism, oil revenue, or other sources that reduce the need for property taxation. The policy does not change frequently, but it is worth confirming the current rules for your specific location before buying property.
Key Takeaways
- Hawaii, Alabama, Louisiana, Delaware, and Wyoming have no statewide property tax on real estate.
- These states fund government through sales tax, income tax, business taxes, or other revenue sources instead.
- Local counties or municipalities in these states may still charge property tax even if the state does not.
- Confirming your county and city tax rules is necessary before assuming your property will have no tax bill.
How these five states fund government without property tax
Hawaii relies heavily on sales tax and tourism revenue. The state sales tax is 4.17 percent, and counties can add local sales tax on top of that. Hawaii also collects income tax and has significant revenue from military spending and federal funds.
Alabama funds schools and services through sales tax (currently 7 percent statewide, with local additions possible) and income tax. The state has historically avoided property tax as a policy choice.
Louisiana uses sales tax (currently 4.45 percent statewide) and income tax. The state also collects oil and gas revenue, which has historically reduced the need for property taxation.
Delaware has no sales tax and no property tax, but collects income tax and business taxes. The state is known for corporate-friendly tax policy, which generates significant revenue.
Wyoming has no income tax, no sales tax, and no property tax. The state funds government primarily through mineral extraction taxes (oil, gas, coal) and federal land payments. This revenue model depends on natural resource extraction and is not available to other states.
Local property taxes still apply in most counties
Even in states with no statewide property tax, your county or city may charge property tax. This is the most important detail to verify before buying property in one of these five states.
In Alabama, for example, most counties do charge property tax even though the state does not. The same is true in Louisiana and Delaware. Hawaii and Wyoming are the exceptions: Hawaii has very limited local property tax, and Wyoming has none at all, but you should still confirm the rules for your specific county before assuming you will pay nothing.
Contact your county assessor's office or county tax collector to find out whether your property will be taxed locally. They can tell you the current rate and what your bill would be based on your home's assessed value. This is a free service and takes one phone call.
How property tax rates compare across these states
| State | Statewide Property Tax | Local Property Tax Possible | Primary Revenue Sources |
|---|---|---|---|
| Hawaii | None | Limited | Sales tax, income tax, tourism |
| Alabama | None | Yes, in most counties | Sales tax, income tax |
| Louisiana | None | Yes, in most parishes | Sales tax, income tax, oil/gas |
| Delaware | None | Yes, in most counties | Income tax, business tax |
| Wyoming | None | None | Mineral extraction tax, federal payments |
What to check before buying property in a no-tax state
If you are considering buying property in Hawaii, Alabama, Louisiana, Delaware, or Wyoming, contact the county assessor or tax collector for the county where the property is located. Ask three specific questions: Does this county charge property tax? If yes, what is the current rate? What is the assessed value of the property you are interested in?
You can find the county assessor's office online by searching "[county name] assessor" or "[county name] property tax." Most offices have a website where you can search property records and tax rates by address. Some allow you to look up a specific property's assessed value and tax bill online.
If you are working with a real estate agent, they should provide this information as part of the home purchase process. If they do not, ask them directly. The property listing should also disclose whether property tax applies and what the current bill is, if one exists.
Why property tax policy matters when buying a home
Property tax affects your total cost of homeownership. In states with no property tax, your annual housing costs may be lower than in states with high property taxes. However, you may pay more in sales tax or income tax instead, so the overall tax burden depends on how much you spend and earn, not just on property ownership.
If you are moving from a state with property tax to one without, or vice versa, calculate your total tax bill under both scenarios. A home worth $300,000 in a state with 1 percent property tax costs $3,000 per year in property tax alone. The same home in a no-property-tax state costs nothing in property tax, but you may pay more in sales tax when you buy goods or more in income tax when you earn money.
The financial benefit of living in a no-property-tax state depends on your personal situation: how much you spend, how much you earn, and how long you plan to stay. Comparing the total tax burden across states is more useful than focusing on property tax alone.
Frequently Asked Questions
Do I have to pay property tax in Wyoming?
Wyoming has no statewide property tax and no local property tax. If you own property in Wyoming, you will not receive a property tax bill. However, you may owe other taxes depending on your income and spending.
Can I avoid property tax by moving to Hawaii?
Hawaii has no statewide property tax, but some counties charge local property tax. Most of Hawaii's counties do not, making it one of the most property-tax-friendly states. Confirm the rules for the specific county where you plan to buy before assuming you will pay nothing.
If my state has no property tax, do I still have to pay taxes on my home?
You will not pay property tax, but you may owe other taxes. These states fund government through sales tax, income tax, or business taxes instead. Your total tax burden depends on how much you spend and earn, not just on property ownership.
What happens if I own property in two states, one with property tax and one without?
You pay property tax on the property in the state that charges it, and you do not pay property tax on the property in the state that does not. Each state taxes property within its borders according to its own rules. Your primary residence may also affect your tax status in some states.
Are there any other states considering eliminating property tax?
No other states currently have plans to eliminate property tax entirely. Property tax is the primary funding source for schools and local services in most states, so eliminating it would require finding alternative revenue sources. The five states without property tax made this choice decades ago and have maintained it through different tax structures.