Are There Any States With No Property Tax? A 2027 Guide for Rental Investors

If you’re getting into turnkey real estate investing, property tax is one of the easier rental expenses to plan for. It’s predictable, it’s generally deductible as a rental expense, and it should be covered by your rental income. The key is for investors to get the right estimate before they buy so they can understand their numbers going into any deal. 

Unfortunately, most “lowest property tax” lists fall short as they’re written for homeowners, and their averages assume the owner lives in the house. Investment properties are often taxed a little differently, so those numbers don’t always match what you’ll pay as an investor.

In this guide, you’ll see:

• Why no state is completely free of property tax
• How rental properties are taxed
• What rental property taxes look like in the markets where RealWealth has recommended property teams
• Why a higher tax rate doesn’t automatically rule out a market

No state skips property tax entirely. Real estate is taxed in all 50 states and D.C., mostly by local governments like counties, cities, and school districts. That’s why your bill can change a lot from one county to the next, even within the same state.

So how do you compare states when every county sets its own rate? Most studies, including WalletHub’s, use the effective property tax rate. It’s the tax paid divided by what the property is worth. For example, a $169,500 Birmingham rental with about $1,596 a year in property taxes has an effective rate of about 0.94%. At a 1% rate, you’d pay about $1,000 a year for every $100,000 of value.

Counties, cities, and school districts tax rental properties the same way they tax any other home. A few rules can work differently once a property isn’t someone’s primary residence, though, and most statewide averages are based on homeowners. Here’s what to know before you run your numbers:

• Homestead exemptions only apply to primary residences, so a rental is taxed on its full assessed value.
• Assessment caps limit how fast taxable value can rise each year. Some states set a separate cap for rentals, and most caps reset when a property sells.
• Assessment classes determine what share of a property’s value gets taxed. In most RealWealth markets, single-family rentals are taxed at the same residential rate as homes. A few states, like Alabama, use a higher rate for rentals.

Investor tip: If you live in one unit of a duplex or small multifamily property and rent out the others, sometimes called house hacking, you may qualify for a homestead exemption on the part you live in. Rules vary by state and county, so check with the local assessor’s office before you buy.

The seller’s last tax bill is a good starting point, but it may not match what you’ll pay. Many turnkey properties are fully renovated before they’re sold, and that last bill usually reflects the property’s value before the rehab. Once the property sells at its updated price, many counties will reassess it closer to that number. The same goes for new construction, where the last bill may only cover the land. For a more accurate estimate, call the county or city assessor’s office and ask what the property is likely to be assessed at after the sale. It’s a quick call, and if you’re investing out of state, it’s an easy way to get local numbers without being there.

In Florida, Texas, and Oklahoma, the limits on how fast taxable value can rise also reset with a new owner, so base your estimate on a value close to your purchase price, not the seller’s capped value.

If you’re financing your rental, your lender will likely collect property taxes through an escrow account as part of your monthly payment, so an accurate estimate helps you know your true monthly cost.

RealWealth recommends vetted teams with investment properties that meet our REAL Income Property Standards™ and property management in place in ten states. Here’s what rental property taxes look like on recent RealWealth pro formas (grouped from lower to higher property taxes):

Want to see how these markets compare beyond property taxes? Our guide to the best places to buy rental property covers the top markets for rental investors right now.

Tennessee is one of the most rental-friendly states for property taxes. Single-family rentals are assessed at 25% of their value, the same rate as owner-occupied homes. On recent RealWealth pro formas, Chattanooga rentals run about 0.6–0.7% in property taxes. Add no state income tax on wages, and it’s hard to beat for rental investors. (More on that in our guide to states with no income tax.) 

If you’re considering a turnkey duplex in Chattanooga, plan on the commercial rate. Tennessee assesses properties with two or more rental units at 40% of their value. Single-family turnkey rentals are usually assessed at the standard 25%, though classification is decided property by property. Since the property team has likely sold similar rentals nearby, they’re a good source for what the tax bill will look like after you buy.

Columbus is our Georgia market, and rental property taxes on recent pro formas there come in around 0.8%. Georgia’s 2024 homestead exemption, which limits increases to inflation, only covers primary residences, so budget your turnkey rental using its full assessed value. Your property team will know what similar rentals in the neighborhood are paying, and that’s usually the best place to start.

Rental property taxes on recent pro formas in the Indianapolis area run about 0.8–1.4%, with duplexes at the higher end. Indiana also gives landlords something most states don’t: a hard limit on the tax bill. A rental can’t be taxed more than 2% of its assessed value in a year, which makes your expenses easier to plan. Voter-approved levies, like school referendums, can add to that, so ask about local levies when you’re looking at Indianapolis.

Missouri treats rentals the same as owner-occupied homes. Both are assessed at 19% of market value, so you won’t pay a higher rate just because you’re renting the place out. Recent pro formas in the St. Louis area show rental taxes of about 0.8–1.3%, and Kansas City, Mo., runs about 1.0–1.3%. If you buy in Kansas City, Mo., ask a CPA about the city’s 1% earnings tax. Whether it applies to your rental depends on how the property is owned and managed.

Alabama assesses rentals at 20% of appraised value. On recent RealWealth pro formas, Birmingham-area rentals run about 0.9–1.1% in property taxes. Huntsville and Tuscaloosa land around 1.0–1.2% inside city limits and lower outside them. With affordable prices, Birmingham, Huntsville, and Tuscaloosa tend to pencil out well for cash flow.

The Kansas City team also works in the Kansas City metro and in Wichita. Kansas assesses residential property, including single-family rentals, at 11.5% of market value, the same as owner-occupied homes. On recent pro formas, rental property taxes run about 1.0–1.4%. Much of the inventory here is new construction, so ask your property team how first-year taxes were estimated.

On recent pro formas in the Oklahoma City area, rental property taxes run about 1.2–1.4%, and teams typically estimate 1.2%. Rentals have a cap here as well. Their taxable value can rise up to 5% a year. Just remember the cap doesn’t transfer when you buy, so your first tax bill will be based on full market value.

Oklahoma voters will also decide State Question 847 on Nov. 3, 2026. It would lower the cap on rentals to 4% starting in 2027.

Rental property taxes on recent RealWealth pro formas in Florida run about 0.9–1.5%, and teams typically estimate 1.5%. Even rentals get some protection from rising values. A rental’s taxable value can’t go up more than 10% a year. The cap covers city and county taxes but not school taxes, and it resets when a property sells. So when you budget for a Jacksonville, Ocala, or Southwest Florida rental, start with full market value for your first year. 

That protection could get stronger. Amendment 3 is on Florida’s Nov. 3, 2026 ballot, and if it passes, the cap for rentals would drop from 10% to 5% starting in 2027.

When you’re budgeting for Florida, insurance deserves as much attention as taxes. Here’s why smart investors aren’t scared of Florida insurance costs.

Rental tax rates vary more in Ohio than in any of our other markets. On recent pro formas, Cleveland-area rentals run about 1.3–1.7%, the Cincinnati and Dayton area about 1.7–2.3%. What balances that out is price. Many Ohio turnkey rentals on recent pro formas are priced between about $100,000 and $160,000, so the dollar amount stays manageable. 

Ohio changed how it taxes rentals in December 2025. Rental properties used to get a 10% credit on part of their tax bill, and that credit is being phased out over four years, starting with tax year 2026. If you’re buying a turnkey rental in Cleveland or Cincinnati/Dayton, add a small bump to your tax estimate each year until the phase-out is done.

Texas has no state income tax and relies on property taxes instead. On recent pro formas in the DFW area and San Antonio, rental property taxes run about 1.2–1.7% once a home is fully assessed. If you live in Texas, your rental income won’t be taxed at the state level either, which helps offset the higher property tax.

Some new construction shows lower taxes in the first year because Texas assesses property based on its value on January 1. A home finished after that date may only be taxed on the land at first. Once it’s fully assessed, plan on that 1.2–1.7% range.

Texas also has a temporary 20% limit on how much a rental’s taxable value can rise each year. It started in 2024 and ends Dec. 31, 2026. That sounds like a big deal, but for turnkey buyers it usually isn’t. When you buy, the county typically assesses the property close to what you paid, so there’s no below-market value for the cap to protect. Use full market value in your numbers, and you’re set. 

Not usually. With a turnkey rental, the question isn’t how high the tax rate is. It’s whether the rent covers the tax bill and your other costs, with cash flow left over.

Say you’re comparing two $200,000 rentals. One is in a state with a 1.3% tax rate, and the other is at 0.5%. The first costs about $217 a month in property tax, and the second about $83, a $134 difference. If the first property rents for $150 more a month, it’s already ahead on cash flow. Our guide on how to calculate cash flow on a rental property walks through the full math. 

Taxes are also just one line in your budget. Insurance, property management, and local landlord laws all play a part in how a rental performs. Our guide to landlord-friendly states compares how rules on evictions, deposits, and rent increases vary by state.

If you’re 65 or older, or a disabled veteran, your state probably offers some kind of property tax break. Most states do. Just know these programs only cover your primary residence.

So if you’re buying turnkey rentals for retirement income, budget them at the regular rate. You can still use any senior or veteran exemption on the place you live, and your county assessor’s office can tell you what’s available.

Every state has property tax, so there’s no avoiding it. What you can do is find out what your rental will actually be taxed at and put that number in your pro forma. With any rental property, you want the rent to cover principal, interest, taxes, and insurance. Whatever’s left is cash flow, and you’re building equity the whole time, too. 

Lower-tax markets like Tennessee and Georgia give your cash flow a head start. Markets like Ohio and Texas can work just as well when the rent and purchase price line up. What matters most is going in with an accurate estimate, and that’s where an experienced local property team helps. If you’re just getting started, here’s how to buy a rental property in 90 days.

RealWealth connects investors with vetted property teams in all ten of these states, each with REAL Income Property Standards™ and property management in place. Join RealWealth and schedule a free strategy session to talk through which markets fit your goals, or browse turnkey rental properties for sale and cash flow properties for sale.