Five states have no property tax on real estate
Hawaii, Alabama, Louisiana, and Delaware do not tax real property — the land and buildings you own. Wyoming also has no property tax on real estate. These five states collect revenue differently: through sales tax, income tax, business taxes, or a combination. If you own a home or land in one of these states, you will not receive a property tax bill from the state government.
This does not mean zero costs. Most of these states charge sales tax instead, and some charge income tax. Local governments in these states may also charge fees for services, though they cannot call them property taxes. The practical effect varies by state and by county — a home in Hawaii costs very differently to own than a home in Wyoming, even though neither state taxes the property itself.
Key Takeaways
- Hawaii, Alabama, Louisiana, Delaware, and Wyoming are the only states with no property tax on real estate.
- These states fund government services through sales tax, income tax, business taxes, or other revenue sources instead.
- Local governments in these states may still charge fees or assessments, but cannot call them property taxes.
- Owning property in a no-property-tax state does not eliminate all housing costs — insurance, maintenance, and utilities still apply.
How each state replaces property tax revenue
Hawaii relies on sales tax (4.17 percent state rate) and income tax. The state also taxes business income and has high excise taxes on fuel and other goods. Because Hawaii is an island state with limited land, the cost of property itself is extremely high even without property tax — a median home costs significantly more than the national average.
Alabama uses sales tax (7 percent state rate) and income tax to fund schools and services. Louisiana also uses sales tax (4.45 percent state rate) and income tax. Delaware has no sales tax and no property tax, instead relying on income tax and business taxes — it is known as a corporate tax haven because many companies incorporate there. Wyoming has no income tax, no sales tax, and no property tax; it funds state government primarily through mineral extraction taxes, business licenses, and federal mineral royalties.
The total tax burden — what you actually pay across all taxes — varies widely. A resident of Wyoming may pay less total tax than a resident of a high-property-tax state, but a resident of Hawaii may pay more overall because property values are so high and sales taxes are steep.
What "no property tax" actually means for homeowners
In these five states, you will not pay an annual property tax bill to the state. You will not receive a tax assessment notice in the mail, and you will not owe money based on your home's value. This is different from states that tax property at low rates — in those states, you still receive a bill and must pay it annually.
However, you will still pay other costs of homeownership: mortgage interest (which may be deductible on your federal return), homeowners insurance, utilities, maintenance, and HOA fees if applicable. Some local governments in these states charge annual fees for services like fire protection or road maintenance, though these are not called property taxes. You should ask your county or city government whether any such fees apply to your address.
If you are considering moving to one of these states to avoid property tax, research the total cost of living, not just the property tax line. A home in Hawaii or Delaware may cost far more upfront than a home in a state with property tax, and your overall tax burden may be higher.
Local assessments and fees in no-property-tax states
Even though the state does not tax property, local governments still need to fund schools, roads, police, and fire services. Some counties and cities in these states charge annual fees or assessments that function similarly to property tax but have different names. These might be called "service fees," "improvement district assessments," or "municipal fees."
The amount and structure vary by county and municipality. Some areas charge a flat fee; others charge based on property size or use. You should contact your county assessor's office or city government to ask whether your property is subject to any local assessments. These fees are often much lower than property taxes in other states, but they are not zero.
Comparison: property tax versus other taxes
| State | Property Tax | State Sales Tax | State Income Tax | Other Major Taxes |
|---|---|---|---|---|
| Hawaii | None | 4.17% | Yes | Excise taxes on fuel, food, imports |
| Alabama | None | 7% | Yes | Business tax |
| Louisiana | None | 4.45% | Yes | Business tax |
| Delaware | None | None | Yes | Corporate income tax, business license fees |
| Wyoming | None | None | None | Mineral extraction tax, business licenses |
Wyoming stands out because it has no state property tax, no state sales tax, and no state income tax. However, this does not mean living there is tax-free — local governments may charge fees, and the state funds itself through mineral taxes and other sources. The practical cost of living depends on where in the state you live and what services your local government provides.
What happens if you move to a no-property-tax state
If you buy property in one of these states, you will not owe state property tax going forward. However, if you own property in another state, you will still owe property tax on that property until you sell it or transfer ownership. Moving to a no-property-tax state does not change your tax obligations in other states.
When you purchase property in a no-property-tax state, the closing process is simpler in one respect — there is no property tax proration (the seller does not owe you a refund for property tax they paid for months you own the house). However, you will still pay other closing costs: title insurance, appraisal fees, recording fees, and any local transfer taxes. Some of these states charge transfer taxes on the sale itself.
If you are relocating and want to understand your total housing costs, contact the county assessor's office in the county where you plan to buy. Ask whether any local fees or assessments apply, and ask about transfer taxes. This will give you a clearer picture than the state-level tax rate alone.
Frequently Asked Questions
Do I have to pay property tax if I own land in one of these states but live somewhere else?
No. If you own property in Hawaii, Alabama, Louisiana, Delaware, or Wyoming, you do not owe state property tax on it, regardless of where you live. However, you may owe property tax on property you own in other states. Each state taxes property located within its borders.
Can I deduct property taxes on my federal return if I live in a no-property-tax state?
No, because you do not pay state property tax. However, you may be able to deduct mortgage interest, property insurance, and state income tax (if your state charges it) on your federal return. Consult a tax professional about what deductions apply to your situation.
Are property values lower in states with no property tax?
Not necessarily. Hawaii has some of the highest property values in the nation despite having no property tax. Property values depend on demand, location, and available land. Wyoming has lower property values in many areas, but this is due to population and economic factors, not the tax structure alone.
If a state has no property tax, does that mean I pay nothing to own a home?
No. You will still pay mortgage payments (if you have a loan), homeowners insurance, utilities, maintenance, and possibly HOA fees or local service assessments. Property tax is one cost among many. Removing it lowers your annual costs, but does not eliminate them.
What if my county charges a "service fee" instead of property tax?
Service fees, improvement district assessments, and similar charges are legal in these states because they are not technically property taxes. They may be lower than property taxes in other states, but you should ask your local government what fees apply to your property and what services they fund.