Four states have no property tax on residential homes
Hawaii, Texas, Florida, and South Dakota do not tax the value of your primary residence. This means if you own a home in one of these states, you will not receive a property tax bill from the state government based on what your house is worth.
The catch is important: no state property tax does not mean no taxes at all. Hawaii, Texas, and Florida make up the lost revenue through other taxes — sales tax, income tax on certain types of earnings, or both. South Dakota has no income tax and no sales tax, but does tax property in limited ways. None of these states is a complete tax haven for homeowners.
If you are considering a move for tax reasons, the real question is not whether property tax exists, but what your total tax burden will be in that state compared to where you live now. That depends on your income, how much you spend, and what kind of property you own.
Key Takeaways
- Hawaii, Texas, Florida, and South Dakota impose no state property tax on residential homes, but each state funds government through different revenue sources.
- Texas and Florida have no income tax but charge sales tax; Hawaii charges both income and sales tax; South Dakota charges neither but taxes certain business property.
- Property tax rates in neighboring states with property tax can sometimes be lower than the combined sales and income taxes you would pay in a no-property-tax state.
- Local property taxes (county and city) may still apply in some of these states, so you need to check your specific county before assuming you pay nothing.
How each no-property-tax state funds government instead
Texas has no state income tax and no property tax on homes. It funds schools and services through sales tax (currently 6.25% statewide, plus local additions that can reach 8.25% total), business taxes, and oil and gas revenue. If you spend heavily on taxable goods, your overall tax burden may not be lower than in a state with property tax.
Florida has no state income tax and no property tax on homes. It relies on sales tax (6% statewide, up to 7.5% with local additions), corporate income tax, and tourism-related taxes. Like Texas, high spending means high sales tax bills. Florida also taxes intangible personal property (stocks, bonds) at low rates in some cases, though this is rarely enforced.
Hawaii charges both income tax and sales tax (4% statewide, up to 4.712% with local additions), plus property tax on commercial and rental property — but not on your primary residence if you own it. Hawaii's income tax rates are among the highest in the nation. The state also taxes capital gains and has excise taxes on many goods.
South Dakota has no income tax, no sales tax, and no property tax on residential homes. It funds government through excise taxes (on fuel, alcohol, tobacco), business taxes, and tourism revenue. South Dakota does tax agricultural land and commercial property, so if you own a farm or business building, you will pay property tax on that.
Local property taxes still apply in some counties
State property tax and local property tax are separate. Even in states with no state property tax, your county or city may charge property tax on your home. This is most common in Hawaii, where some counties do assess residential property tax despite the state having none.
Before you buy a home in any of these four states, check with the county assessor's office in the specific county where you plan to live. Ask whether residential property tax is charged locally. The answer varies by county, and a county with local property tax can significantly change your total cost of ownership.
Comparing total tax burden across states
A homeowner in Texas or Florida pays no property tax but may pay 8% or more in combined sales tax on everyday purchases. A homeowner in a neighboring state with property tax might pay 1% to 2% annually on the home's value but lower sales tax. Over 10 years, the math can favor either state depending on your income, spending habits, and home value.
If you earn $100,000 per year and spend $40,000 of it on taxable goods, you would pay roughly $3,200 in sales tax in Texas or Florida (at 8% average). In a state with 1.5% property tax on a $300,000 home, you would pay $4,500 in property tax but likely lower sales tax. The no-property-tax state wins in this scenario. But if you earn $200,000 and spend $120,000 on taxable goods, the sales tax bill climbs to $9,600, and the property-tax state becomes cheaper.
Use a tax calculator specific to each state, or speak with a tax professional who knows both your current state and the state you are considering. The decision should rest on your actual numbers, not on the headline that one state has no property tax.
How to verify the tax rules for your specific county
Each county assessor's office maintains a record of what property is taxed and at what rate. You can contact them by phone or visit their website — most counties post their assessment practices online. Ask specifically whether residential property tax is charged in that county, what the rate is, and whether any exemptions apply to primary residences.
If you are buying a home, the title company or real estate agent can also tell you what property taxes apply to that specific address. Do not assume the state rule applies everywhere; verify at the county level before you commit to a purchase or move.
Frequently Asked Questions
If I move to Texas or Florida, do I pay zero property tax on my house?
You pay zero state property tax on your primary residence. However, check your specific county — a few counties in these states do charge local property tax despite the state having none. Contact the county assessor before buying to confirm.
Can I avoid all taxes by moving to South Dakota?
No. South Dakota has no income tax, no sales tax, and no residential property tax, but it charges excise taxes on fuel, alcohol, and tobacco, plus business and corporate taxes. If you own a business or farm, you will owe property tax on that land.
Is Hawaii really tax-free on homes?
Hawaii has no state property tax on your primary residence, but it charges income tax (some of the highest rates in the nation) and sales tax. Some Hawaii counties also assess local property tax on residential homes, so verify with your county assessor.
Which state is cheapest for a homeowner overall?
It depends entirely on your income and spending. Run your numbers through a state tax calculator for Texas, Florida, South Dakota, and Hawaii, then compare to your current state. A state with no property tax is not automatically cheaper than one with property tax if sales or income taxes are higher.
Do these states tax rental property or investment homes?
Yes. All four states tax rental property, commercial property, and investment real estate. The exemption from property tax applies only to your primary residence. If you own a second home or rental property in these states, you will owe property tax on it.