Why does Texas have such high property tax if it has no income tax?

Texas funds its government primarily through sales tax, property tax, and oil and gas severance taxes (no personal income tax). Property tax is the largest single source of local revenue, particularly for school districts. The Texas property tax effective rate of 1.60 percent is the sixth highest in the nation, deliberately so. Texas voters approved Proposition 4 in 2023 to raise the homestead exemption from $40,000 to $100,000, and the state legislature has periodically pushed for additional homestead reform, but property tax remains the structural funding mechanism for local government in Texas. New Hampshire and Texas are the two no-income-tax states with property tax in the highest-quartile of US states.

What about states with low property tax and low income tax?

Few states are low on both. Wyoming, Tennessee, and Nevada combine zero state income tax with property tax in the lowest quartile. Hawaii has the lowest property tax rate in the US (0.32 percent) but a high state income tax (up to 11 percent top marginal). Alabama has the second-lowest property tax (0.41 percent) and a moderate state income tax (5 percent flat). Colorado has the third-lowest property tax (0.49 percent) and a 4.4 percent flat income tax. The combination of low income tax + low property tax is rare; Wyoming and Tennessee are the strongest combinations available.

Home/States With No Property Tax

DETAIL · PROPERTY TAX

UPDATED MAY 2026

States with no property tax: the honest answer

Q: Which no-income-tax state has the lowest property tax?

Nevada at 0.53 percent average effective rate. The Nevada Constitution caps the property tax rate, and most Nevada counties levy total rates of $3.00 to $3.66 per $100 of assessed value (where assessed value is 35 percent of taxable market value). On a $400,000 home, Nevada property tax is approximately $2,120 per year. Wyoming is second among the 9 no-income-tax states at 0.56 percent average. Tennessee third at 0.64 percent. Florida fourth at 0.86 percent. Washington fifth at 0.94 percent. Alaska sixth at 1.04 percent. South Dakota seventh at 1.08 percent. Texas eighth at 1.60 percent. New Hampshire ninth at 1.86 percent.

Q: Do property tax freezes exist for seniors?

Yes, in many states. Texas has a school district property tax freeze for homeowners aged 65+ (no income limit) under TX Tax Code 11.26. Florida has the Save Our Homes 3 percent annual increase cap for all homesteaded properties (any age). Tennessee has a senior property tax freeze under TN Code 67-5-705 for homeowners aged 65+ with household income below approximately $50,000 (varies by county). Nevada offers a 3 percent annual cap on owner-occupied homes (any age) under NRS 361.4722. Senior-specific freezes also exist in Georgia, New York, and Massachusetts. Each is a powerful tax-management tool for homeowners aging into retirement.

Short version: no US state has zero property tax. All 50 states permit property tax to be levied at the local level (county, municipal, school district). The question 'which state has no property tax' is technically unanswerable. The useful question is which states have the lowest property tax rates, what exemptions exist for homesteaders and seniors, and where the no-income-tax states sit in the property tax ranking. Below is the full breakdown.

Sources: Tax Foundation 2024 effective property tax rate data, state revenue departments, US Census Bureau Property Tax data 2024.

§ I · The Lowest Property Tax States

10 lowest property tax states (effective rate)

Rank	State	Eff. rate	$400K home	Income tax
#1	Hawaii	0.32%	$1,280	1.4-11% graduated
#2	Alabama	0.41%	$1,640	5% flat
#3	Colorado	0.49%	$1,960	4.4% flat
#4	Nevada	0.53%	$2,120	0% (no-tax state)
#5	Wyoming	0.56%	$2,240	0% (no-tax state)
#6	Utah	0.58%	$2,320	4.65% flat
#7	South Carolina	0.58%	$2,320	0-7% graduated
#8	West Virginia	0.59%	$2,360	3-6.5% graduated
#9	Tennessee	0.64%	$2,560	0% (no-tax state)
#10	Arkansas	0.64%	$2,560	2-4.4% graduated

Effective property tax rate = annual property tax bill / market value. Tax Foundation 2024 data. Three of the top 10 lowest property tax states are also no-income-tax states (Nevada, Wyoming, Tennessee).

§ II · The 9 No-Income-Tax States Ranked on Property Tax

Property tax across the 9 no-income-tax states

Among the 9 no-income-tax states, property tax burdens range widely. Nevada at 0.53 percent is the lowest and 4th lowest in the country overall. New Hampshire at 1.86 percent is the highest of the 9 and 4th highest in the country overall. The spread within the 9 (0.53 to 1.86 percent) is wide enough that property tax is the second most important tax factor in choosing among the 9 (after income tax, which is zero in all of them).

No-tax state rank	State	Eff. rate	$500K home	Notes
#1	Nevada	0.53%	$2,650	NRS 361.4722 caps annual increase at 3% for owner-occupied
#2	Wyoming	0.56%	$2,800	Lowest total tax burden state in US
#3	Tennessee	0.64%	$3,200	Senior property tax freeze TN Code 67-5-705 (income-limited)
#4	Florida	0.86%	$4,300	$50K Homestead Exemption + Save Our Homes 3% cap
#5	Washington	0.94%	$4,700	Senior exemption available, income-limited
#6	Alaska	1.04%	$5,200	$150K homestead exemption for seniors 65+ (AS 29.45.030)
#7	South Dakota	1.08%	$5,400	Owner-occupied classification reduces rate ~30%
#8	Texas	1.60%	$8,000	$100K homestead + over-65 school freeze (TX Tax Code 11.26)
#9	New Hampshire	1.86%	$9,300	4th highest property tax in nation. No state sales tax to offset.

For a $500K home: Nevada saves $6,650 per year vs New Hampshire. Texas property tax on the same home costs $4,500 more per year than Nevada. The choice among the 9 hinges substantially on the property tax rate combined with home value choice. Households planning to buy a $700K+ home should heavily weight Nevada, Wyoming, and Tennessee. Households planning to rent or buy modest property are less affected.

§ III · Homestead and Senior Exemptions

How exemptions and caps actually work

Property tax in the US has two structural pieces: the rate (set by taxing authorities, typically expressed as percent of assessed value or dollars per $100 of value) and the assessed value (set by county appraisers, typically a fraction of market value). Homestead exemptions reduce the assessed value before the rate is applied. Caps limit how much assessed value can rise from year to year on a homesteaded property. Senior freezes lock the assessed value (or specifically the school district portion) at the year the senior qualifies. Each mechanism reduces the property tax bill differently.

Florida's Save Our Homes (SOH) cap is the most generous of the no-income-tax states. SOH limits annual assessed value increases to 3 percent or the CPI, whichever is lower, on homesteaded properties. After 10 years of ownership through a period of meaningful home price appreciation, SOH typically protects a Florida homeowner from $5,000 to $20,000 per year of property tax that would otherwise apply at full market value reassessment. Florida's $50,000 Homestead Exemption layers on top, taking $50K off the assessed value before the cap takes effect.

Texas's over-65 school district tax freeze under TX Tax Code 11.26 locks the school district portion of the property tax bill at the year the homeowner turns 65. Since school district tax typically represents 50 to 60 percent of the total Texas property tax bill, the over-65 freeze meaningfully softens the high Texas property tax rate for retired homesteaders. The freeze applies to the school district portion only; county and municipal portions can still rise. Texas also has the $100,000 homestead exemption (raised from $40,000 by Proposition 4 in 2023) that applies to the school district portion specifically.

Nevada's NRS 361.4722 caps annual property tax bill increases at 3 percent for owner-occupied primary residences and 8 percent for non-owner-occupied properties. The cap applies to the bill, not just the assessed value, providing absolute predictability for homesteaders. Wyoming and South Dakota offer modest senior-only exemptions but no broad cap; New Hampshire offers limited senior relief with strict income limits. Alaska's senior homestead exemption ($150K of assessed value off for residents aged 65+) is among the most generous in the country for that demographic.

§ IV · Why Texas and NH Have High Property Tax

The trade-off: no income tax means high something-else tax

States need to fund their budgets. The big revenue sources are: personal income tax, corporate income tax, sales tax, property tax, severance taxes (oil, gas, minerals), and federal transfers. A state that gives up one of these big sources usually has to push harder on the others. Texas and New Hampshire are the clearest examples within the 9 no-income-tax states.

Texas funds its government primarily through sales tax (8.20 percent combined average), property tax (1.60 percent average effective rate), and oil and gas severance taxes (the state's third-largest revenue source after sales and property tax). Property tax is the largest single source of local government revenue, particularly for school districts (which fund roughly 60 percent of K-12 education from property tax). The high property tax rate is the structural funding choice; voter-approved homestead exemption increases (Proposition 4 in 2023, raising the school district homestead from $40K to $100K) have softened the bill but not changed the underlying rate.

New Hampshire's situation is more extreme. NH has no state income tax (the Interest and Dividends Tax is being phased out by 2027) and no state sales tax. The entirety of state and local revenue comes from property tax, business taxes (BPT and BET), excise taxes (cigarettes, alcohol), and federal transfers. Property tax is therefore the single dominant source of state-level revenue, producing the 1.86 percent average effective rate that is fourth highest in the nation. For a household with significant income but a modest home, NH is a tax bargain (no income tax, no sales tax, low excise). For a household with a high-value home, NH's property tax can exceed the savings on the income tax that other states would have charged.

By contrast, Wyoming and Nevada keep property tax low because they have substantial alternative revenue sources. Wyoming relies heavily on severance taxes from coal, natural gas, oil, and uranium production (severance taxes produce roughly 25 percent of state revenue). Nevada relies heavily on the gross gaming revenue tax (roughly 30 percent of state revenue) and tourism-related sales taxes. South Dakota relies on a combination of sales tax and bank franchise tax (the state hosts substantial credit card and trust company operations). Tennessee relies primarily on sales tax (the highest combined rate in the nation at 9.55 percent). Each no-income-tax state has a different revenue substitution; the property tax outcome depends on which substitutions the state can sustain.

§ V · Queries

Frequently asked

Q.01Are there any US states with no property tax?

No. All 50 US states permit property tax to be levied at the local level. The lowest effective rates: Hawaii 0.32 percent, Alabama 0.41 percent, Colorado 0.49 percent. The 'no property tax' search query is technically unanswerable; the lowest-property-tax states are the practical answer.

Q.02Which no-income-tax state has the lowest property tax?

Nevada at 0.53 percent average effective rate (4th lowest in the country). Wyoming second at 0.56 percent, Tennessee third at 0.64 percent. Florida fourth at 0.86 percent. New Hampshire highest of the 9 at 1.86 percent.

Q.03Do property tax freezes exist for seniors?

Yes. Texas has a school district property tax freeze for homeowners aged 65+ (no income limit). Florida has Save Our Homes 3 percent cap (any age). Tennessee has a senior property tax freeze (income-limited). Nevada offers a 3 percent annual cap on owner-occupied homes (any age).

Q.04Why does Texas have such high property tax?

Texas funds local government primarily through property tax, particularly for school districts. The 1.60 percent effective rate is the 6th highest in the nation. Voter-approved homestead exemption increases have softened the bill but not the rate.

Q.05Are there any states with no property tax for homesteaders?

No state has zero property tax for homesteaders, but several have generous exemptions. Florida's $50K Homestead Exemption + Save Our Homes can effectively reduce the bill substantially over time. Alaska exempts homesteaders aged 65+ from the first $150K of assessed value. Texas's $100K school district homestead exemption plus over-65 freeze can effectively eliminate the school portion for senior homesteaders.

Q.06What states have low property tax and low income tax?

Wyoming, Tennessee, and Nevada combine zero state income tax with property tax in the lowest quartile. Hawaii has the lowest property tax in the US (0.32 percent) but a high income tax. Alabama has 2nd lowest property tax (0.41 percent) and a moderate 5 percent income tax. The combination of low income tax + low property tax is rare.

§ VI · Related

Related dossiers

ANALYSIS

Total tax burden

Income, property, sales tax combined across the 9

RANKED

Cheapest overall

The 9 ranked by total cost-of-living + tax burden

FILING

Nevada: full filing

Lowest property tax of the 9 plus zero income tax

FILING

Wyoming: full filing

Second lowest property tax + lowest total burden in US

FILING

Texas: full filing

High property tax, $100K homestead, over-65 freeze

FILING

New Hampshire: full filing

Highest property tax of the 9, no sales tax to offset

Sources: Tax Foundation 2024 effective property tax rate data, US Census Bureau Property Tax data 2024, state revenue departments, FL Statutes 196 (homestead exemption), TX Tax Code 11.26 (over-65 freeze), TN Code 67-5-705 (senior freeze), NRS 361.4722 (Nevada cap), AS 29.45.030 (Alaska senior exemption). Last reviewed May 2026. Information is for educational purposes only and is not tax, financial, or legal advice.