No state in the country is free of property taxes. Every state allows local governments to collect them, and even states that impose no statewide property tax rely on counties, cities, and school districts that do. So the honest answer to what states don’t have property taxes is none of them, but the effective rate a homeowner actually pays swings dramatically by location: from roughly 0.27% of home value in Hawaii to 2.23% in New Jersey. Where you buy can shift your annual bill by thousands of dollars.
Why No State Is Property-Tax-Free
Property taxes are overwhelmingly a local revenue source, not a state one. Counties, cities, school districts, and special districts each set their own rates and collect their own levies. School districts alone account for the largest share of most property tax bills, often more than half.
That structure is why a governor or state legislature can’t simply abolish property taxes. Doing so would defund local police departments, fire stations, public schools, libraries, and road maintenance. A few states have tried capping local property tax growth through voter-approved limits, but none has eliminated the tax itself. When you see a state described as having “no property tax,” it almost always means no state-level property tax while local taxes continue as usual.
States With the Lowest Property Tax Rates
Effective property tax rate is what homeowners actually pay as a percentage of their home’s market value. It accounts for local rates, exemptions, and assessment practices, which makes it the fairest way to compare states. The national average sits around 0.99%. Based on 2023 Census data, the ten states with the lowest effective rates are:
- Hawaii: 0.27%
- Alabama: 0.38%
- Arizona: 0.48%
- Nevada: 0.49%
- Colorado: 0.49%
- Idaho: 0.49%
- Delaware: 0.50%
- Tennessee: 0.50%
- South Carolina: 0.51%
- Utah: 0.52%
Hawaii’s rate is so low partly because home values there are among the highest in the country. A 0.27% rate on a $900,000 home still produces a substantial dollar amount. Alabama, by contrast, combines low rates with low home values, producing some of the smallest property tax bills in the nation in raw dollars.1Tax Foundation. Property Taxes by State and County, 2025
States With the Highest Property Tax Rates
On the other end, some states charge more than double the national average:
- New Jersey: 2.23%
- Illinois: 2.07%
- Connecticut: 1.92%
- New Hampshire: 1.77%
- Vermont: 1.71%
- New York: 1.60%
- Texas: 1.58%
- Wisconsin: 1.51%
- Nebraska: 1.50%
- Iowa: 1.43%
Texas and New Hampshire both appear on this list despite having no state income tax. That’s the trade-off in action: states that skip income taxes often lean harder on property taxes to fund government services. A home assessed at $350,000 in New Jersey generates about $7,800 in annual property taxes, while the same home in Hawaii would owe roughly $950.1Tax Foundation. Property Taxes by State and County, 2025
Low Property Taxes Usually Mean Higher Taxes Somewhere Else
States with low property taxes don’t just get by with less revenue. They make up the difference elsewhere, and the trade-off matters for your overall finances.
Higher sales taxes are the most common offset. Several states with property tax rates well below the national average impose sales tax rates above 7% when you combine the state and local components. Income taxes are another lever: some low-property-tax states charge graduated income taxes that can reach 5% or more. Resource-rich states sometimes rely on severance taxes on oil, gas, and mineral extraction to fill the gap. Tourism-dependent states lean on hotel taxes, rental car surcharges, and entertainment taxes that shift the burden to visitors.
A low property tax rate alone doesn’t tell you much about whether a state is actually cheap to live in. A state with a 0.40% property tax rate but an 8.5% combined sales tax and a 5% income tax might cost you more overall than a state with a 1.2% property tax rate and no income tax. The math depends on your income, spending habits, and home value. States without an income tax tend to have higher property taxes or sales taxes, and the reverse is equally common. The only honest comparison estimates your total tax burden across all categories for each state you’re considering.
Ways to Reduce Your Property Tax Bill
Regardless of which state you live in, most offer programs that reduce the property tax burden for qualifying homeowners. Knowing what you’re eligible for can save hundreds or thousands of dollars a year, and many people leave money on the table simply because they never apply.
Homestead Exemptions
A homestead exemption reduces the taxable value of your primary residence. You typically must own the home, live in it as your main residence, and not claim the exemption on any other property. The dollar amount varies dramatically by state. Several states offer unlimited equity protection, others cap the exemption at a fixed dollar amount ranging from a few thousand dollars to several hundred thousand, and some provide no general homestead exemption at all. In almost every case, you must file an application with your local assessor’s office.
Senior and Disability Exemptions
Most states offer additional relief for residents who are 65 or older or who have a qualifying disability. These programs take different forms: some freeze your assessed value so it can’t increase, others reduce the taxable amount by a flat dollar figure, and some defer the tax payment until the home is sold. Eligibility usually depends on age, income limits, and how long you’ve owned and occupied the home. Disabled veterans with a service-connected disability rating often qualify for a separate, more generous exemption, with some states waiving property taxes entirely for veterans rated at 100% disability.
Circuit Breaker Programs
About half of all states run circuit breaker programs that limit property taxes based on a percentage of your household income. If your property tax bill consumes too large a share of what you earn, the program kicks in to reduce it. These programs typically target seniors and people with disabilities on fixed incomes, though some states extend them more broadly. The credit is usually calculated on a sliding scale tied to income, and the benefit shrinks as income rises.
Challenging Your Assessment
If your assessed value seems too high, you can appeal it. Check the assessment notice for errors in square footage, lot size, and other property details, since factual mistakes inflate assessments more often than people expect. Gather recent sales of comparable homes in your neighborhood that sold for less than your assessed value. Most jurisdictions give homeowners 30 to 60 days after a reassessment notice to file, so the deadline is tight. The hearing before a review board is usually informal, and you don’t need a lawyer. Boards can lower your assessed value, and in some jurisdictions they can also raise it, so bring solid evidence.
Renters Pay Property Taxes Too
You don’t escape property taxes just because you rent. Landlords treat property taxes as a cost of owning the building, and research from the Federal Reserve Bank of Philadelphia found that landlords pass through roughly $0.50 to $0.89 of every $1.00 in property tax increases to tenants through higher rent. The effect is strongest for new leases, where the landlord can set the price fresh.2Federal Reserve Bank of Philadelphia. Property Tax Pass-Through to Renters: A Quasi-Experimental Approach
Moving to a low-property-tax state can lower your housing costs even if you’re renting, though the relationship is less direct than for homeowners. A handful of states offer renter-specific property tax credits, typically calculated as a percentage of your annual rent that’s assumed to go toward property taxes.