Five states collect no property tax on real estate
Hawaii, Alabama, Louisiana, and Delaware charge no statewide property tax on real estate. Wyoming also has no property tax. These five states fund schools and local services through other revenue sources — mainly sales tax, income tax, or both — rather than taxing the value of land and buildings.
However, "no property tax" does not mean you pay nothing to own property in these states. Most still charge annual fees for vehicle registration, business licenses, and other services. Some charge local assessments for specific improvements like water lines or road repairs. And in a few cases, counties or municipalities have found ways to tax property indirectly through different names.
If you own property in one of these states or are considering a move, understanding what you actually pay — and what you do not — matters for your budget and long-term financial planning.
Key Takeaways
- Hawaii, Alabama, Louisiana, Delaware, and Wyoming impose no statewide property tax on real estate owned by individuals.
- These states fund local government and schools through sales tax, income tax, business taxes, or other revenue sources instead.
- No property tax does not mean no costs: you may still pay local assessments, vehicle registration fees, or county-specific charges.
- Some of these states have high sales tax or income tax rates that offset the savings from no property tax.
- A few counties within these states have created local property tax systems despite the state ban, so location within the state matters.
Hawaii: No property tax, but high cost of living
Hawaii has no statewide property tax on real estate. However, Hawaii has a high general excise tax (4 percent statewide, up to 4.5 percent in some counties) that applies to most goods and services, including rent. The state also taxes income, with rates ranging from 1.4 percent to 11 percent depending on your bracket.
Property owners in Hawaii do pay annual fees to the state for vehicle registration and licensing. Counties may also charge local assessments for specific services or infrastructure improvements. The combination of high sales tax, income tax, and cost of living means that the absence of property tax does not necessarily make Hawaii affordable compared to other states.
Alabama: No property tax, but local assessments vary
Alabama has no statewide property tax on real estate. The state funds education and local services through sales tax (which varies by county from 7 percent to 11 percent) and income tax (ranging from 2 percent to 5 percent).
However, some Alabama counties and municipalities have created local property tax systems or special assessment districts despite the state prohibition. These are typically limited to specific areas or purposes — for example, a county might tax property to fund a particular school district or water system. Before buying property in Alabama, check with the county assessor's office to confirm whether your specific location has any local property taxes or assessments.
Louisiana: No property tax, with state and local variation
Louisiana has no statewide property tax on real estate. The state relies on sales tax (which ranges from 4.45 percent statewide to over 10 percent when local taxes are included) and income tax (ranging from 2 percent to 6 percent) to fund services.
Like Alabama, Louisiana allows some local jurisdictions to impose property taxes or assessments within their boundaries. New Orleans, for example, has a local property tax despite the state ban. The rules vary significantly by parish (Louisiana's term for county), so you need to check the specific location where you plan to own property. Contact the local assessor's office or tax collector to learn what you would actually owe.
Delaware: No property tax, but high corporate tax revenue
Delaware has no property tax on real estate. The state funds schools and local government primarily through income tax (ranging from 0 percent to 6.6 percent), sales tax (6 percent), and corporate taxes — Delaware's business-friendly laws attract many corporations to incorporate there, generating significant state revenue.
Property owners still pay annual vehicle registration fees and may face local assessments for specific services. Delaware counties do not impose property taxes, so your location within the state does not change this rule. However, the state's reliance on income and sales tax means residents pay through other channels.
Wyoming: No property tax and no income tax
Wyoming has no property tax on real estate and no state income tax. The state funds schools and local services through sales tax (4 percent statewide, up to 6 percent with local additions), excise taxes on fuel and alcohol, and mineral extraction taxes (Wyoming has significant oil and natural gas production).
Wyoming counties do not impose property taxes either, so property ownership costs are genuinely lower than in most other states. However, the sales tax rate can be high in some counties, and vehicle registration fees explore. Wyoming's combination of no property tax and no income tax makes it unusual — most states that skip property tax still tax income.
What you actually pay in these states
The absence of property tax does not mean zero annual costs for property ownership. In all five states, you will encounter:
- Vehicle registration and licensing fees — charged annually by the state, varying by vehicle type and value.
- Local assessments — charges for specific improvements or services (water line installation, road repair, drainage) that benefit your property.
- Homeowners association fees — if your property is in a planned community or condo building.
- Sales tax on purchases — which can be high in these states to compensate for lack of property tax revenue.
- Income tax — in Hawaii, Alabama, Louisiana, and Delaware (Wyoming has none).
To compare the true cost of property ownership across states, calculate your total tax burden: property tax (zero in these five) plus sales tax, income tax, and any local assessments. A state with no property tax but 10 percent sales tax may cost more overall than a state with moderate property tax and lower sales tax.
Frequently Asked Questions
Can I buy property in these states if I do not live there?
Yes. Non-residents can own property in Hawaii, Alabama, Louisiana, Delaware, and Wyoming. You will still owe any local assessments or fees, and you may owe income tax to the state if you have rental income from the property. Consult a tax professional in the state where you buy to understand your obligations.
Do these states tax rental income?
Hawaii, Alabama, Louisiana, and Delaware all tax income, including rental income from property you own. Wyoming does not tax income at all. If you rent out property in any of these states, you will report the income on your state tax return (or not file one, in Wyoming's case) and pay tax accordingly.
What happens if I inherit property in one of these states?
Inheritance tax and estate tax rules vary. Hawaii has no estate tax. Alabama, Louisiana, Delaware, and Wyoming also have no state estate tax or inheritance tax. However, you may owe federal estate tax if the total value of the estate exceeds the federal threshold (which changes yearly). Consult an estate attorney in the state where the property is located.
Are property values higher or lower in states with no property tax?
Property values depend on location, demand, and local economic conditions — not primarily on whether the state has property tax. Hawaii has very high property values due to limited land and high demand. Wyoming and rural Louisiana have lower values. The absence of property tax can make a property more affordable to own long-term, but it does not determine the purchase price.
If I move to one of these states, when do I stop paying property tax in my old state?
You stop owing property tax in your old state once you sell the property or transfer ownership. Some states require you to file a final return for the year of sale. Contact your old state's tax department or a local tax professional to confirm the exact process and important date.