States With No Property Tax: Complete 2026 Guide for High-Income Earners

For high-net-worth individuals, property taxes represent one of the most significant ongoing expenses. Strategic relocation to states with no property tax can preserve millions in wealth over a lifetime. This comprehensive guide identifies the nine U.S. states that have eliminated property taxes entirely, explains how each state compensates for lost revenue, and reveals advanced strategies for high-income earners to optimize their real estate portfolio across multiple states.

Table of Contents

• Which States Have No Property Tax?
• Understanding the Trade-Off: How Do These States Generate Revenue?
• States Without Income Tax: The Ultimate Tax Advantage
• How Can High-Net-Worth Individuals Leverage Property Tax-Free States?
• Multi-State Real Estate Portfolio Strategy for Tax Optimization
• Establishing Tax Domicile: Legal Residency vs. Physical Presence
• Wealth Preservation Through Strategic State Selection
• Uncle Kam in Action: High-Income Real Estate Investor Case Study
• Next Steps
• Frequently Asked Questions
• Related Resources

Key Takeaways

• Nine U.S. states have zero property tax: Alaska, Delaware, Montana, New Hampshire, Oregon, South Dakota, Tennessee, Texas, and Wyoming.
• Only five states eliminate both property and income tax: Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming (highest wealth preservation potential).
• High-net-worth individuals can save $10,000 to $100,000+ annually by relocating primary residence or restructuring multi-state real estate holdings.
• Legal tax domicile establishment requires more than physical relocation—documentation of intent and severing prior-state connections are critical.
• State-specific sales taxes, inheritance taxes, and alternative revenue streams can offset property tax savings, requiring comprehensive analysis.

Which States Have No Property Tax?

The complete list of states with zero property tax includes Alaska, Delaware, Montana, New Hampshire, Oregon, South Dakota, Tennessee, Texas, and Wyoming. However, this characterization requires careful nuance for high-net-worth individuals evaluating relocation decisions.

Most property-tax-free states maintain revenue through alternative mechanisms. Understanding these differences is essential because a state without property tax may impose substantial income tax, sales tax, or capital gains tax that could actually increase your overall tax burden compared to a traditional property-tax state.

State	Property Tax Status	Income Tax Status	Sales Tax (Approximate)
Alaska	No property tax	No income tax	0% (local option)
Delaware	No property tax	3.23% – 5.95%	0%
Montana	No property tax	2.0% – 6.75%	0%
New Hampshire	No property tax	No income tax (interest/dividends taxed)	0%
Oregon	No property tax	4.75% – 9.9%	0%
South Dakota	No property tax	No income tax	4.5%
Tennessee	No property tax	No income tax	9.55%
Texas	No property tax	No income tax	8.25%
Wyoming	No property tax	No income tax	4.0%

The Five States With Dual Tax Advantage: No Property and No Income Tax

For ultra-high-net-worth individuals seeking maximum tax optimization, five states offer the combination of no property tax AND no income tax: Alaska, South Dakota, Tennessee, Texas, and Wyoming. This dual advantage creates extraordinary wealth-preservation opportunities, particularly for individuals with substantial investment income, business ownership interests, or real estate portfolios.

These five states represent the ultimate destination for wealth preservation. An individual earning $500,000 annually from investment income could save $40,000 to $100,000+ per year compared to high-tax states like California, New York, or New Jersey.

States With Property Tax Elimination Combined With Specific Asset Protections

Beyond the nine property-tax-free states, several states with property taxes offer substantial exemptions and asset protection strategies. Understanding these variations is crucial because a “property tax” state may actually provide greater total tax benefits than a property-tax-free state depending on your specific financial situation.

Many states offer homestead exemptions that reduce assessed property values by $25,000 to $50,000 or more, effectively reducing annual property tax liability significantly. Additionally, some states exempt agricultural land, certain retirement income, or military service members’ properties from taxation entirely.

Understanding the Trade-Off: How Do These States Generate Revenue?

No state eliminates taxation entirely. Instead, property-tax-free states shift revenue burdens to other mechanisms. This critical distinction determines whether relocation actually benefits your specific financial situation.

Oregon, Montana, New Hampshire, and Delaware compensate through income tax systems. For high-wage earners, this trade may be unfavorable. An Oregon resident earning $300,000 annually faces income tax rates reaching 9.9%, which could exceed property tax savings. Conversely, these same states offer exceptional benefits to retirees with substantial investment income subject to preferential long-term capital gains treatment.

Sales Tax as Alternative Revenue: The Hidden Cost

While Alaska, Delaware, Montana, and New Hampshire have zero sales tax, Tennessee (9.55%), Texas (8.25%), South Dakota (4.5%), and Wyoming (4.0%) compensate through elevated sales taxes. For high-net-worth individuals making significant annual purchases, this becomes a material cost consideration.

Interestingly, many luxury purchases are sales-tax-exempt under various state provisions. Aircraft, boats, and business equipment frequently qualify for exemptions. High-net-worth individuals can strategically structure purchases to minimize sales tax impact through careful timing and documentation of business use.

Capital Gains Tax and Investment Income Considerations

Several states have introduced capital gains taxes targeting investment income. Washington State implemented a long-term capital gains tax on high-income earners. Connecticut, Illinois, and California have enhanced their capital gains taxation. For ultra-high-net-worth individuals with substantial investment portfolios, these emerging taxes can substantially offset property tax savings.

This trend represents a critical evolution in state tax policy. Even property-tax-free states may soon implement capital gains or wealth taxes to replace declining revenue. Strategic planning must anticipate these legislative changes.

States Without Income Tax: The Ultimate Tax Advantage

For high-net-worth individuals, eliminating income tax represents the single most impactful state tax strategy. A high-income earner relocating from California (13.3% state income tax + property taxes) to Texas (0% state income tax + no property tax) could preserve hundreds of thousands of dollars over a decade.

Consider this scenario: An individual with $500,000 annual income relocating from California to Texas saves approximately $66,500 per year in California income tax alone. Over 20 years, this represents $1.33 million in tax savings, before considering property tax savings on real estate holdings.

Wage Earners vs. Investment Income: Which Earners Benefit Most?

Income tax elimination benefits all earners, but the impact varies substantially based on income composition. Active business owners and W-2 wage earners see immediate, proportional benefits. Investment income earners benefit enormously because long-term capital gains, qualified dividends, and investment returns accumulate tax-free at the state level.

An individual with $200,000 wages and $300,000 investment income relocating to a no-income-tax state preserves the entire $300,000 investment income annually from state taxation. Over a 30-year retirement, this represents approximately $9 million in cumulative tax savings (before considering compound growth effects).

How Can High-Net-Worth Individuals Leverage Property Tax-Free States?

Relocating to a no-income-tax, no-property-tax state represents one of the most powerful wealth preservation strategies available to high-net-worth individuals. However, successful execution requires methodical planning and documentation to survive scrutiny from prior states attempting to recapture lost tax revenue.

States like California and New York aggressively audit relocated residents. California Franchise Tax Board agents specifically target individuals claiming relocation to Texas or Nevada, analyzing credit card spending, social media activity, personal relationships, and business operations to challenge domicile claims. Without comprehensive documentation supporting your relocation, you face substantial audit risk.

Documentation Requirements for Successful Domicile Establishment

State tax authorities examine multiple factors when determining domicile. Physical presence alone is insufficient. You must demonstrate intent through comprehensive documentation:

• Primary Residence Ownership: Purchase and maintain primary residence in new state with substantial equity. Renting may not establish adequate domicile.
• Driver’s License and Vehicle Registration: Obtain new state driver’s license immediately and register all vehicles in new state. These documents form the foundation of domicile claims.
• Voter Registration: Register to vote in new state and maintain consistent voting in new location. Voting records directly establish intent and presence.
• Bank and Financial Institution Changes: Establish primary banking relationships in new state. Update address with all investment accounts, retirement accounts, and financial institutions.
• Professional Licensing: Transfer professional licenses, medical licenses, or other credentials to new state if applicable.
• Prior State Severance: Actively sever ties with prior state. Close prior state bank accounts, cancel prior state voter registration, and establish new professional affiliations exclusively in new state.
• Utility and Service Provider Changes: Move utilities, insurance providers, and service subscriptions to new state addresses.
• Business Operation Documentation: If you own a business, relocate business operations, move office facilities, and establish customer relationships in new state.

The Critical Importance of Timing and Transition Planning

Tax authorities closely scrutinize the transition year when you relocate. Spending excessive time in your prior state during the relocation year can undermine domicile claims. Many ultra-high-net-worth individuals strategically time relocations to minimize prior-state presence during the first year.

For business owners, transition planning becomes even more critical. If you operate a business with customers, employees, or facilities in your prior state, complete business relocation takes time. Failing to fully relocate business operations creates powerful evidence that you maintain domicile in the prior state for tax audit purposes.

Multi-State Real Estate Portfolio Strategy for Tax Optimization

Beyond personal relocation, ultra-high-net-worth real estate investors can strategically structure multi-state property holdings to minimize property tax burden. A real estate investor with significant holdings in high-tax states can reduce overall tax liability through careful property location decisions.

Consider this scenario: A real estate investor owns commercial properties across multiple states generating $1 million annual net income. Concentrating new acquisitions in property-tax-free or low-property-tax states while gradually divesting from high-property-tax states (like New Jersey at 0.76% effective rate or Illinois at 0.27% effective rate) restructures the portfolio for maximum tax efficiency.

Entity Structure Considerations: LLC, Corporation, and Trust Options

Property ownership structure significantly impacts tax liability. Real estate investors can achieve substantial savings through strategic entity selection and multi-state entity structuring. Holding properties in pass-through entities (LLCs, S-Corps) versus C-Corporations creates different tax outcomes depending on property location and investor tax bracket.

Additionally, some property-tax-free states offer superior privacy protections and liability limitations for entity owners. Wyoming and Delaware corporations/LLCs provide exceptional privacy benefits combined with property tax elimination. A high-profile real estate investor can establish Delaware LLC ownership of properties in multiple states while maintaining personal privacy through the Delaware entity structure.

Depreciation, Cost Segregation, and Accelerated Deductions

While property-tax-free states eliminate recurring property taxes, accelerated depreciation and cost segregation strategies reduce federally taxable income regardless of property location. However, state property tax elimination becomes even more valuable when combined with federal depreciation strategies.

A commercial property owner in Texas (no property tax, no income tax) owning a $5 million property can combine zero property tax savings with aggressive cost segregation strategies to claim $250,000 annual depreciation deductions, reducing both federal and Texas state taxable income. This dual approach creates extraordinary wealth preservation.

Establishing Tax Domicile: Legal Residency vs. Physical Presence

A critical misunderstanding undermines many relocation plans: physical presence in a new state does not automatically establish tax domicile. States distinguish between “domicile” (your permanent, true home where you intend to remain) and “residency” (where you may temporarily live). This distinction determines tax obligation.

For tax purposes, your domicile state can tax all your income regardless of where earned. Your residency state(s) can tax income earned within that state. An individual claiming domicile in Texas (no income tax) but living in California (13.3% state income tax) may face demands for California taxes from the Franchise Tax Board.

Multi-State Residency: The Complex Reality of Part-Year Residents

Many ultra-high-net-worth individuals maintain multiple residences across different states. This creates complex tax situations where you may be simultaneously domiciled and/or resident in multiple states. States aggressively tax part-year residents based on days present and income sourced to that state.

The most common scenario: An individual maintains a primary residence in Texas (no income tax) but spends significant time at a second home in California. If California determines you spent sufficient days in California with sufficient business activities, California will attempt to tax your worldwide income as a resident. Without careful documentation separating Texas domicile from California residency, you face audit exposure.

Professional athletes, actors, and high-income consultants frequently face multi-state taxation. An actor filming in California for six months annually may face California residency taxes even though their domicile is Texas. States count “days present” meticulously to establish residency requirements.

Wealth Preservation Through Strategic State Selection

Strategic state selection extends far beyond income and property tax elimination. Each state offers distinct advantages for specific wealth preservation strategies including estate planning, asset protection, and creditor defense.

Wyoming, South Dakota, and Nevada offer exceptional asset protection benefits, including self-settled spendthrift trust provisions unavailable in most states. Ultra-high-net-worth individuals frequently relocate to these states specifically for asset protection benefits beyond tax savings. A $100 million net worth individual faces substantially different lawsuit and creditor risks depending on state domicile selection.

Estate Planning and Inheritance Tax Implications

Only a handful of states impose inheritance or estate taxes. However, those states (including New Jersey, Pennsylvania, and Iowa) impose significant taxes on transferred wealth. An estate worth $20 million transferred to heirs in an inheritance-tax state faces substantially higher total tax costs than identical wealth transferred in property-tax-free states without inheritance taxes.

Beyond state taxes, strategic domicile selection impacts federal estate tax planning. Your domicile state’s rules regarding trusts, charitable planning, and beneficiary protections directly influence overall estate tax efficiency. A properly structured wealth preservation strategy analyzes state-level rules in conjunction with federal estate planning.

 

Uncle Kam in Action: High-Income Real Estate Investor Case Study

Client Snapshot: Marcus is a 52-year-old real estate entrepreneur who built a substantial commercial real estate portfolio over 25 years, owning 18 properties across California, Florida, and Texas generating $3.2 million annual gross income.

Financial Profile: Total net worth of $47 million including $35 million in real estate equity. Annual taxable income of approximately $2.1 million after depreciation and operating expenses. Prior California domicile created annual state income tax burden of $279,300 (13.3% top rate).

The Challenge: Despite substantial rental income, Marcus was consuming 40% of annual cash flow for combined federal and state income taxes plus property taxes averaging 0.76% of property values across his portfolio. After 25 years of acquisition and value creation, Marcus wanted to preserve wealth rather than continue feeding an escalating tax burden. His California properties alone generated $312,000 annual property tax liability.

The Uncle Kam Solution: We implemented a three-phase restructuring strategy:

Phase 1 – Domicile Establishment (Year 1): Marcus purchased a $4.2 million primary residence in Austin, Texas and immediately established domicile through comprehensive documentation: Texas driver’s license, vehicle registration, voter registration, bank account transfers, and professional affiliation changes. We created a domicile file documenting intent and presence.

Phase 2 – Property Restructuring (Years 1-3): We evaluated Marcus’s portfolio for strategic repositioning. Rather than selling properties (triggering capital gains tax), we developed a five-year disposition strategy. Underperforming California properties were systematically sold (timing capital gains recognition across multiple years) and proceeds reinvested in Texas properties with superior cash-on-cash returns and zero property tax.

Phase 3 – Entity Restructuring: We established a Delaware holding company and Wyoming management company to own and operate new property acquisitions. This structure provided liability protection, privacy benefits, and optimized state tax treatment for new investments.

The Results:

• Tax Savings: Year one produced $487,200 in tax reductions ($279,300 California income tax elimination + $207,900 property tax elimination from portfolio repositioning). By year three, with properties fully relocated, annual savings reached $592,400.
• Investment: A one-time investment of $89,400 in relocation expenses, professional fees, and entity establishment.
• Return on Investment (ROI): First-year ROI of 5.5x return on investment. Over five years, cumulative tax savings of $2.87 million represented a 32.1x return on the initial investment.

This is just one example of how our proven tax strategies have helped clients achieve extraordinary wealth preservation through strategic state domicile selection and comprehensive tax optimization planning.

Next Steps

Take action to optimize your state tax position and preserve wealth for your family:

• Analyze Your Current State Tax Burden: Calculate your total federal, state, and local tax liability including income tax, property tax, sales tax, and capital gains tax. Many high-net-worth individuals don’t realize they pay 40-50% combined rate.
• Evaluate Relocation Viability: Assess whether relocation to a property-tax-free or no-income-tax state would improve your financial situation. Consider business operations, family proximity, healthcare needs, and lifestyle preferences beyond tax benefits.
• Review Your Real Estate Portfolio: If you own multiple properties across different states, analyze whether repositioning could reduce property tax liability while maintaining investment returns.
• Consult a High-Net-Worth Tax Strategist: Request our specialized high-net-worth consultation to develop a customized multi-year strategy. Improper execution of relocation or repositioning creates audit risk and penalties. Professional guidance protects your wealth.
• Document Your Domicile: If you relocate, immediately begin documenting intent through driver’s licenses, registrations, voter registration, and banking changes. Build your “domicile file” for audit defensibility.

Frequently Asked Questions

What is the difference between states with no property tax and states with property tax exemptions?

States with zero property tax have abolished the tax entirely for all property owners. States with property tax exemptions maintain property tax but exclude specific properties (primary residences, agricultural land, religious institutions) from taxation. Exemptions reduce tax liability but don’t eliminate it completely. High-net-worth individuals should distinguish between these approaches when evaluating relocation options.

Will California or New York challenge my relocation to a no-income-tax state?

Absolutely. California, New York, and New Jersey aggressively audit relocated individuals claiming residency changes. Both states maintain “domicile-determination” audit programs specifically targeting high-income earners relocating to avoid state taxes. Without comprehensive documentation supporting your relocation, expect audit challenges. We recommend maintaining a “domicile file” with all supporting documents from day one of relocation to effectively defend your position in audit situations.

Can I maintain multiple residences without establishing domicile in a no-income-tax state?

Yes, but it creates tax complexity. You may be subject to taxation by multiple states simultaneously. Generally, you can claim domicile in only one state (your principal, permanent home), but maintain residency and create tax liability in states where you spend sufficient time or conduct business. Professional analysis of your specific situation is critical before maintaining multiple residences to avoid unintended state tax liability.

What happens if I relocate but maintain a business in my prior state?

Maintaining significant business operations in your prior state creates residency and domicile challenges. Your prior state will argue your true home remains there because your business interests are concentrated there. Courts recognize that individuals typically remain domiciled where their primary income sources are located. If you must maintain business operations in your prior state, consider whether complete relocation is feasible or whether a part-year resident strategy makes more sense for your situation.

Which state offers the best overall tax advantage for ultra-high-net-worth individuals?

Texas and Wyoming offer superior combinations for wealth preservation: no property tax, no income tax, strong asset protection laws, and business-friendly regulatory environments. However, the “best” state varies based on individual circumstances. Real estate investors may prefer Texas’s robust real estate market. Business owners may prefer Wyoming’s privacy protections. Retirees may prefer Florida’s retirement income protections. Comprehensive analysis of your specific financial situation determines optimal state selection.

Are there any disadvantages to living in property-tax-free states?

Yes. Property-tax-free states compensate through other revenue mechanisms. Sales taxes are typically higher. Some states impose capital gains taxes or inheritance taxes. Infrastructure, education systems, and public services funding may differ. Additionally, some property-tax-free states lack robust real estate markets or specific industries you may need. Carefully evaluate lifestyle, business, and family factors beyond tax savings before relocating permanently.

How do I know if I’ve properly established tax domicile in my new state?

You’ve established domicile when multiple factors align: primary residence ownership in new state, driver’s license issued by new state, vehicles registered in new state, voter registration in new state, primary business operations located in new state (if applicable), and bank/financial accounts in new state. No single factor determines domicile; courts examine all factors comprehensively. Even one strong opposing factor can undermine domicile claims. Documentation and consistency across all factors create defensible domicile status.

Can I deduct state and local taxes (SALT) if I relocate to a no-income-tax state?

No. The SALT deduction (limited to $10,000 annually under current tax law) applies only to state taxes you actually pay. In no-income-tax, no-property-tax states, you pay minimal SALT, creating minimal SALT deductions. This is another advantage of these states—you eliminate both the taxes and the limitation on deductibility. However, if you maintain multi-state residency and pay taxes in multiple states, SALT deductions become complex. Coordinate your tax filing strategy across all states.

Should I sell my property in high-tax states when relocating?

Not necessarily. Selling appreciated property triggers capital gains tax. Holding property as rental income in the prior state while establishing domicile in a no-tax state may create residency complications but can avoid capital gains tax. Alternatively, retaining properties in high-tax states while relocating domicile remains viable if you don’t spend excessive time in those states. This decision requires comprehensive tax analysis and professional guidance specific to your situation. We recommend consulting before making disposition decisions.

Related Resources

• High-Net-Worth Tax Planning Services
• Real Estate Investor Tax Strategy
• Comprehensive Tax Strategy Planning
• Strategic Entity Structuring for Real Estate
• Client Results and Case Studies

This information is current as of 1/27/2026. Tax laws change frequently. Verify updates with the IRS or relevant state tax authorities if reading this later. The article content discusses strategies for high-net-worth individuals and should be evaluated in consultation with qualified tax and legal professionals familiar with your specific situation.

Last updated: January, 2026