It’s a question that comes up often when people think about relocating or investing in real estate: “What states don’t have property tax?”
The short answer: no state in the U.S. has zero property taxes. Every state collects property taxes in some form because they fund essential services like schools, police, fire departments, and local infrastructure. But here’s the good news: while no state has eliminated property taxes entirely, some have much lower effective property tax rates than others. If you’re looking to minimize your annual property tax bill, understanding which states are the lowest is a good start.
This guide breaks down the reality of property taxes, highlights the states with the lowest and highest rates, and gives context on how Oregon fits into the national picture.
Do Any States Actually Have No Property Tax?
The idea of a state with no property tax is a misconception. While states like Texas and Florida have eliminated state income taxes, property taxes are still collected at the county and municipal level.
Here’s why property taxes exist everywhere:
- They provide stable revenue to fund public schools, police, fire, and local roads.
- They’re tied to the value of real estate, making them a predictable revenue stream.
- States that cut property taxes deeply usually rely on higher sales or income taxes to make up the difference.
So while you can’t escape property taxes entirely, you can choose states where the rates are very low.
States With the Lowest Property Tax Rates (2025)
Using the latest Tax Foundation, WalletHub, and other data, here are the states where homeowners pay the lowest effective property tax rates:
| State | Effective Tax Rate | Notes / Context |
|---|---|---|
| Hawaii | 0.26% | Lowest in the nation, but offset by very high home prices. |
| Alabama | 0.36%–0.39% | One of the most affordable states for property ownership. |
| Nevada | 0.44%–0.50% | Strongly limited by state law; tourism-driven economy fills revenue gaps. |
| Arizona | 0.45% | Lower-than-average, with wide county-by-county differences. |
| Colorado | 0.48%–0.49% | Low effective rates despite rising home values. |
| Louisiana | 0.55% | Among the bottom five nationally. |
| South Carolina | 0.56% | Offers additional homestead exemptions for seniors. |
| Delaware | 0.58% | Small state with relatively low local tax burdens. |
| West Virginia | 0.59% | Low home values + modest tax rates keep bills very affordable. |
What This Means in Dollars
If you own a $300,000 home in Alabama, at 0.39% you’d pay about $1,170 per year in property taxes. Compare that to New Jersey, where the same $300,000 home would generate a tax bill closer to $6,600 per year.
States With the Highest Property Taxes
At the other end of the spectrum, some states carry a much heavier property tax burden. These include:
| State | Effective Tax Rate |
|---|---|
| New Jersey | 2.23% |
| Illinois | ~2.08% |
| New Hampshire | ~2.00% |
| Connecticut | ~1.98% |
| Vermont | ~1.86% |
For homeowners, that’s the difference between paying $1,000–$2,000 annually versus $6,000+ on the same value of property.
Why Property Taxes Vary So Much by State
Several factors explain the huge differences between states:
- Local Funding Priorities: States that rely heavily on property taxes to fund schools and services naturally have higher rates.
- Alternative Taxes: States with no income or sales tax often lean harder on property taxes (e.g., Texas, New Hampshire).
- Home Values: Even low-rate states with high property values (like Hawaii) can still generate sizable tax bills.
- State Laws: Some states cap increases or set strict formulas, while others allow local jurisdictions more freedom.
Oregon & the Pacific Northwest Context
So how does Oregon compare?
- Oregon’s effective property tax rate averages around 0.9%, which puts it in the middle of the pack nationally.
- Portland-area homeowners typically pay slightly higher due to metro-area assessments.
- Oregon has unique property tax rules shaped by Measure 5 and Measure 50, which limit assessed value growth and tax rates.
- While property taxes aren’t the lowest, Oregon balances it by having no statewide sales tax — something few other states can claim.
Example:
- $500,000 Portland home at 0.9% = ~$4,500/year in property taxes.
- That’s higher than Alabama but much lower than New Jersey or Illinois.
Should You Move Just for Lower Property Taxes?
It’s tempting to focus on just property taxes, but the full tax picture matters.
- Texas has no state income tax, but higher property taxes (1.6%).
- Oregon has moderate property taxes, but no state sales tax.
- Florida combines no income tax with moderate property taxes (~0.9%).
When evaluating a move, consider:
- Total tax burden (income, sales, property).
- Housing affordability.
- Quality of schools, healthcare, and services.
- Long-term investment value in your property.
For many, lower property taxes don’t automatically mean lower overall cost of living.
Conclusion
No state in the U.S. has eliminated property taxes entirely — but some make homeownership much more affordable with very low effective rates. Hawaii, Alabama, Nevada, and Colorado lead the pack with the lowest, while states like New Jersey and Illinois remain the most expensive for property owners.
In Oregon, property taxes fall near the national average, but the absence of a sales tax balances things out. For Portland homeowners and investors, it’s important to understand not just the tax rate, but the broader financial picture.
👉 Want expert insight into managing rental costs and maximizing returns in Portland? Contact Portland Rental Property Manager today.
