Hawaii is the only state with no property tax
Hawaii is the only U.S. state that does not levy a property tax on real estate. Homeowners and landlords in Hawaii pay no annual tax based on the value of their land or buildings. This makes Hawaii unique among all 50 states.
However, Hawaii residents and property owners still pay other taxes. The state has a general excise tax (similar to a sales tax) that applies to most goods and services, including rent. Property owners also pay state income tax if they earn income. So while property tax specifically does not exist in Hawaii, the overall tax burden depends on income, spending, and what you own.
If you own property in Hawaii or are considering buying there, you should understand what taxes you will actually owe and how they compare to property taxes in other states. The absence of property tax does not mean property ownership is tax-free.
Key Takeaways
- Hawaii has no property tax on real estate, making it the only state without this tax.
- Hawaii residents and property owners still pay state income tax and a general excise tax on most purchases and services.
- Some states have very low property tax rates (under 0.5%), but Hawaii remains the only state with zero property tax.
- Property tax rates vary widely by state and county, ranging from under 0.3% to over 2% of property value in some areas.
How Hawaii's tax system works instead of property tax
Hawaii replaced traditional property tax with other revenue sources. The state's general excise tax (GET) is 4% on most goods and services, and counties can add an additional 0.5%. This means when you rent an apartment, buy groceries, or pay for services, you pay this tax. For property owners who rent out their buildings, the rental income is subject to GET.
Hawaii also taxes income at rates ranging from 1.4% to 11%, depending on your income bracket. State income tax applies to wages, business income, and investment income. Combined, these taxes generate the revenue that other states collect through property tax.
The practical effect is that Hawaii property owners do not receive a property tax bill each year, but they pay taxes in other ways. Someone who owns a home outright and has no income would pay almost no state tax in Hawaii. Someone who rents the property out or works would pay income tax and excise tax instead.
States with very low property tax rates
While Hawaii is alone in having zero property tax, several states have rates below 0.5% of property value. Alabama, Louisiana, Mississippi, and West Virginia all have effective property tax rates under 0.5%. These states collect property tax but at much lower rates than the national average of around 0.8% to 1.2%.
The difference between a 0.3% rate and a 1.5% rate is significant on a $300,000 home. At 0.3%, you would pay roughly $900 per year. At 1.5%, you would pay roughly $4,500 per year. Even within low-tax states, rates vary by county, so your actual bill depends on where in the state you own property.
If low property tax is important to you, these states are worth researching alongside Hawaii. However, they do collect property tax, so you will receive an annual bill. The trade-off is that some of these states may have higher income tax or sales tax to make up the difference.
Why property tax varies so much between states
States set their own property tax rates and rules. Some states rely heavily on property tax to fund schools, roads, and local services. Others use income tax or sales tax instead. Historical decisions, state constitutions, and local funding needs all shape how much property tax a state collects.
Hawaii's decision to avoid property tax was deliberate. The state chose to fund services through income tax and the general excise tax. Other low-tax states made similar choices decades ago, and changing the system now would require major shifts in how schools and local governments are funded.
County and local governments also set rates within state limits. Even in states with low property tax, some counties charge more than others. Your actual property tax bill depends on both the state rate and your county's rate, plus any local assessments for schools or infrastructure.
What property tax pays for in states that have it
In most states, property tax funds local schools, county government, fire departments, libraries, and road maintenance. The property tax bill you receive often breaks down by recipient — so much goes to schools, so much to the county, so much to the local fire district. This is why property tax rates vary so much by location: a county with new schools or aging infrastructure may charge more than one with older, paid-off buildings.
Hawaii funds these services through income tax, excise tax, and state appropriations instead. Schools, fire departments, and local services still exist and still cost money — the funding source is just different. Residents do not see a separate property tax bill, but they pay for these services through other taxes.
How to find your state's property tax rate
If you own property or are thinking about buying, you can find your state's property tax rate through your state's department of revenue or tax assessor's office. Most states publish average effective rates (the percentage of property value paid in tax per year). County assessor websites usually show the specific rate for your county and sometimes break it down by district.
Your county assessor's office can also tell you how your property is valued for tax purposes. In many states, assessed value (the value used for taxes) differs from market value (what you could sell it for). Some states assess at 100% of market value; others assess at 10% or 50%. This affects how much tax you owe on the same property.
If you are comparing states or counties, ask for the effective tax rate — the actual percentage of property value paid in tax. This number is more useful than the nominal rate, because it accounts for how properties are assessed.
Frequently Asked Questions
Do I have to pay property tax in Hawaii if I own a home there?
No. Hawaii has no property tax on real estate, so you will not receive a property tax bill. However, you will pay state income tax if you have income, and you will pay the general excise tax on purchases and services. If you rent out the property, rental income is also taxed.
Can I move to Hawaii to avoid property tax?
You can move to Hawaii for any reason, but understand that the state taxes income and most purchases instead. If you have significant income or spend a lot, you may pay more in other taxes than you would have paid in property tax elsewhere. The total tax burden depends on your personal situation, not just property tax.
What is the highest property tax rate in the United States?
Property tax rates vary by county and state. Some counties in New Jersey, Illinois, and Connecticut charge over 2% of property value per year, making them among the highest in the nation. Rates change yearly, so you should check your specific county's current rate rather than relying on national rankings.
If Hawaii has no property tax, why is real estate so expensive there?
Property prices in Hawaii are driven by supply and demand, not by property tax. The islands have limited land, high population density, and strong demand from both residents and investors. These factors push prices up regardless of tax policy. Low property tax does not automatically make real estate affordable.
Do other countries have no property tax?
Some countries have no annual property tax or very low rates, but this article focuses on U.S. states. If you are interested in property tax policy internationally, you would need to research individual countries' tax systems separately.