No state has eliminated both property tax and income tax. If you’re looking for states with no property tax and no income tax, the honest answer is that the combination doesn’t exist anywhere in the country. Nine states charge no personal income tax — Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming1Tax Foundation. State Individual Income Tax Rates and Brackets, 2025 — but all fifty states impose property tax through local governments. The useful question is which trade-offs each state makes to replace that lost income tax revenue, because the money always comes from somewhere.
Why No State Has Zero Property Tax
Property tax is overwhelmingly a local tax, not a state-level one. Counties, cities, municipalities, and school districts collect it to pay for public schools, police and fire services, road maintenance, and other local government functions.2Tax Policy Center. How Do State and Local Property Taxes Work? In fiscal year 2023, property taxes made up 28.9% of all state and local tax revenue nationwide, the single largest source, despite being levied almost entirely at the local level.3Tax Foundation. Property Taxes by State and County, 2026
The mechanics work the same way everywhere. A local assessor estimates what your property would sell for on the open market. Local governing bodies then set a tax rate, sometimes called a millage rate, that applies to that assessed value.2Tax Policy Center. How Do State and Local Property Taxes Work? Even in states where the state government itself imposes no property tax, your county and school district still bill you every year. Miss the payment and you face penalties, and eventually a tax lien on your home.
Property Tax Rates in the Nine No-Income-Tax States
Skipping income tax says nothing about what your property tax bill will look like. Some no-income-tax states rank among the highest in the country for property tax rates, precisely because they rely on that revenue to replace what an income tax would generate.
New Hampshire’s effective property tax rate is approximately 1.50%, fifth-highest in the nation. Texas sits at 1.36%, seventh-highest.3Tax Foundation. Property Taxes by State and County, 2026 On a $400,000 home, that works out to roughly $5,400 to $6,000 a year in property taxes alone. In higher-value areas the bills climb sharply.
Other no-income-tax states keep property taxes more manageable. Alaska’s effective rate runs about 0.94%, near the middle nationally.3Tax Foundation. Property Taxes by State and County, 2026 Nevada, Wyoming, and Florida generally maintain lower effective rates. Florida also offers extra protection through its “Save Our Homes” provision, which caps annual increases in a primary residence’s assessed value at 3% or the change in the Consumer Price Index, whichever is less. For 2026, that cap is 2.7%. Your tax bill can’t spike dramatically just because home values in your neighborhood surged.
How These States Replace the Missing Income Tax Revenue
Every state needs revenue, and the ones that skip income tax fill the gap with a different mix of sales taxes, business taxes, and natural resource fees. You pay these whether or not they show up on a pay stub.
Sales Tax
Sales tax is the most common substitute. Tennessee’s combined state and local rate averages 9.61%, the second-highest in the country. Washington averages 9.51%, and Nevada comes in around 8.23%.4Tax Foundation. State and Local Sales Tax Rates, 2026 Florida charges a 6% state rate plus county surtaxes that push the effective rate higher in many areas. South Dakota, Texas, and Wyoming levy state sales taxes in the 4% to 6.25% range before local additions.
Two exceptions stand out. Alaska has no statewide sales tax, though some local governments impose their own. New Hampshire has no general sales tax at all, making it the only state in the country with neither a personal income tax nor a broad-based sales tax. That sounds appealing until you look at the property tax bill, which is how New Hampshire funds what other states pay for through income or sales taxes.
Business and Resource Taxes
Alaska funds a large share of its state budget through taxes on oil and gas production.5Justia Law. Alaska Code 43.55.011 – Oil and Gas Production Tax The state also pays residents an annual Permanent Fund Dividend sourced from investment returns on accumulated petroleum wealth. The 2025 dividend was $1,000 per eligible resident.6Permanent Fund Dividend: Alaska Department of Revenue. Alaska Permanent Fund Dividend
Texas imposes a franchise tax on most businesses operating in the state, with rates of 0.375% for retailers and wholesalers and 0.75% for other businesses in 2026. Companies earning less than $2,650,000 in annual revenue owe nothing.7Texas Comptroller of Public Accounts. Franchise Tax Washington takes a different approach with its Business and Occupation tax, which hits gross receipts regardless of whether the business turned a profit. Rates range from about 0.47% for retailers to 1.5% for service businesses.8Washington Department of Revenue. Business and Occupation (B&O) Tax These costs get baked into the prices consumers pay, so you absorb some of them indirectly.
Washington’s Capital Gains Tax
Washington deserves an asterisk on its no-income-tax label. In 2021, the legislature enacted a tax on long-term capital gains from sales of stocks, business interests, and similar investments. The Washington Supreme Court upheld it in 2023 by classifying it as an excise tax on the transaction rather than a tax on the income it generates.9Washington State Courts. Quinn v. State – No. 100769-8 The legislature has since expanded the tax to include a higher rate tier for gains exceeding $1 million. Real estate sales, retirement account withdrawals, and certain agricultural transactions remain exempt. Ordinary wages are still untaxed, but if you’re relocating with a significant investment portfolio, this cost could land on you in ways it wouldn’t in the other eight states.
Estate Taxes in No-Income-Tax States
If estate planning matters to your decision, eight of the nine no-income-tax states impose no state estate or inheritance tax. Washington is the lone exception, and a substantial one. For deaths in 2026, Washington’s estate tax applies to gross estates above $3,076,000, with rates starting at 10% and climbing to 35% on the portion above $9 million.10Washington Department of Revenue. Estate Tax Tables That 35% top rate is the highest of any state.
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming all skip estate and inheritance taxes entirely.
Estimating Your Actual Tax Burden
Focusing on income tax alone gives you an incomplete picture. A Texas resident might save $5,000 in state income tax compared to a neighbor in Colorado, then spend $6,000 more on property tax. A New Hampshire household pays no income tax and no sales tax but faces property tax bills that rival mortgage payments. Tennessee keeps property taxes relatively low but takes a cut of nearly everything you buy.
Estimate your total state and local tax burden based on your actual situation: how much you earn, what your home is worth, and how much you spend on taxable goods each year. Someone with a high salary and a modest home usually does save money in a no-income-tax state. A retiree with limited income buying an expensive home in Texas or New Hampshire could easily pay more in total state and local taxes than they would in a state with a moderate income tax and lower property tax rates. The math is personal, and the answer shifts depending on which line of the budget you look at.