How property tax is calculated
Property tax is a yearly tax on the value of your home, set by your county, city, school district and other local bodies. Almost every local system follows the same three steps:
- Assessed value. The assessor estimates your home’s market value, then applies an assessment ratio. Many states tax 100% of market value; others tax a fixed share, such as 10% or 50%.
- Taxable value. Exemptions come off the assessed value. The most common is the homestead exemption for your main home. Seniors, veterans and people with disabilities often get extra exemptions.
- Tax. The taxable value is multiplied by the combined rate of every local body that taxes your property. The rate is written as a percentage or in mills.
Taxable value = assessed value − exemptions
Property tax = taxable value × rate (or × mills ÷ 1,000)
Monthly escrow = property tax ÷ 12
A mill is $1 of tax per $1,000 of taxable value. So 1 mill = 0.1%, 10 mills = 1% and 25 mills = 2.5%.
Using the state averages
Pick a state and the calculator fills in that state’s average effective rate: the total property tax homeowners paid divided by the total value of their homes. It already reflects typical assessment ratios and exemptions, so use it with an assessment ratio of 100% and no exemptions for a quick estimate.
For your actual bill, type the rate from your last tax notice or your county assessor’s website. The state is then switched to “My own rate”. Open More options to add your assessment ratio and exemptions, or to enter the rate in mills.
Worked example 1: a quick estimate
A $400,000 home at the 2024 US average effective rate of 0.888%:
- Yearly tax: $400,000 × 0.888% = $3,552
- Monthly escrow: $3,552 ÷ 12 = $296
These are the calculator’s default numbers.
Worked example 2: assessment ratio, homestead exemption and mills
A home worth $400,000 is assessed at 50% of market value. The owner has a $25,000 homestead exemption, and the combined local rate is 30 mills.
- Assessed value: $400,000 × 50% = $200,000
- Taxable value: $200,000 − $25,000 = $175,000
- Tax: $175,000 × 30 ÷ 1,000 = $5,250 a year, or $437.50 a month
The homestead exemption saves $25,000 × 0.030 = $750 a year. The effective rate is $5,250 ÷ $400,000 = 1.31%.
Worked example 3: same house, two states
Take a $350,000 home.
- In Texas, at the 1.245% state average: $350,000 × 1.245% = $4,357.50 a year
- In Hawaii, at 0.308%: $350,000 × 0.308% = $1,078 a year
That is a difference of over $3,000 a year, or about $273 a month on your mortgage payment. Texas has no state income tax, and local governments lean heavily on property tax instead.
Property tax rates by state
Average effective property tax rates for owner-occupied homes in 2024, highest first. The rate is aggregate real estate taxes paid ÷ aggregate home value. The median tax bill and median home value are shown for context. Source: US Census Bureau, American Community Survey 2024 1-year estimates (tables B25090, B25082, B25103 and B25077), our calculation.
| Rank | State | Average effective rate | Median tax bill | Median home value |
|---|---|---|---|---|
| 1 | Illinois | 1.79% | $5,399 | $280,700 |
| 2 | New Jersey | 1.68% | $9,358 | $496,000 |
| 3 | Vermont | 1.40% | $5,026 | $352,800 |
| 4 | Nebraska | 1.38% | $3,739 | $263,100 |
| 5 | Connecticut | 1.35% | $6,573 | $396,900 |
| 6 | New Hampshire | 1.35% | $6,707 | $458,800 |
| 7 | Ohio | 1.28% | $2,937 | $239,800 |
| 8 | Iowa | 1.25% | $2,937 | $227,300 |
| 9 | Texas | 1.25% | $4,108 | $313,200 |
| 10 | New York | 1.23% | $6,542 | $449,800 |
| 11 | Kansas | 1.20% | $2,983 | $238,700 |
| 12 | Wisconsin | 1.19% | $3,680 | $294,700 |
| 13 | Pennsylvania | 1.14% | $3,214 | $277,600 |
| 14 | Michigan | 1.13% | $2,988 | $254,200 |
| 15 | South Dakota | 1.00% | $2,940 | $289,600 |
| 16 | Rhode Island | 1.00% | $4,886 | $455,700 |
| 17 | Minnesota | 0.99% | $3,501 | $344,600 |
| 18 | Massachusetts | 0.95% | $6,080 | $607,400 |
| 19 | North Dakota | 0.94% | $2,550 | $266,100 |
| 20 | Maine | 0.90% | $3,103 | $341,900 |
| 21 | Maryland | 0.90% | $4,144 | $436,300 |
| 22 | Alaska | 0.90% | $3,976 | $376,500 |
| 23 | Missouri | 0.85% | $2,021 | $254,400 |
| 24 | Oregon | 0.79% | $3,895 | $497,500 |
| 25 | Oklahoma | 0.78% | $1,672 | $222,100 |
| 26 | Georgia | 0.77% | $2,554 | $343,300 |
| 27 | Florida | 0.76% | $2,993 | $396,900 |
| 28 | Indiana | 0.76% | $1,798 | $243,500 |
| 29 | Virginia | 0.75% | $2,872 | $403,500 |
| 30 | Washington | 0.74% | $4,729 | $602,200 |
| 31 | Kentucky | 0.72% | $1,611 | $226,000 |
| 32 | California | 0.69% | $5,369 | $759,500 |
| 33 | District of Columbia | 0.63% | $4,594 | $733,400 |
| 34 | North Carolina | 0.62% | $2,044 | $333,000 |
| 35 | New Mexico | 0.61% | $1,776 | $279,900 |
| 36 | Montana | 0.59% | $2,939 | $425,400 |
| 37 | Wyoming | 0.58% | $1,947 | $339,500 |
| 38 | Louisiana | 0.56% | $1,187 | $223,200 |
| 39 | Arkansas | 0.54% | $1,113 | $215,600 |
| 40 | Mississippi | 0.54% | $1,221 | $186,500 |
| 41 | Colorado | 0.52% | $2,828 | $574,600 |
| 42 | Delaware | 0.51% | $1,750 | $371,600 |
| 43 | Nevada | 0.50% | $2,143 | $455,500 |
| 44 | West Virginia | 0.48% | $881 | $170,800 |
| 45 | Tennessee | 0.46% | $1,488 | $332,600 |
| 46 | Utah | 0.45% | $2,648 | $545,200 |
| 47 | South Carolina | 0.44% | $1,337 | $299,500 |
| 48 | Idaho | 0.43% | $1,912 | $446,400 |
| 49 | Arizona | 0.43% | $1,828 | $426,000 |
| 50 | Alabama | 0.37% | $890 | $233,300 |
| 51 | Hawaii | 0.31% | $2,385 | $875,900 |
| United States | 0.89% | $3,211 | $360,600 |
A state average hides big local differences. Rates within one state can vary by a factor of three or more between counties and school districts.
What affects your property tax
- Where you live. School districts are usually the largest part of the bill. Cities and special districts (fire, library, water) add their own rates.
- Reassessment. Your bill can rise because your home’s assessed value went up, even if the rate stayed the same. Some states cap yearly increases for homesteads, such as California’s 2% cap under Proposition 13 and Florida’s Save Our Homes cap.
- Exemptions. Homestead, senior, veteran and disability exemptions can cut the taxable value a lot. They rarely apply automatically.
- Improvements. Adding a room, a pool or a garage raises the assessed value.
Tips to lower your property tax
- Apply for every exemption you qualify for. Check your county assessor’s website, especially after you buy a home or turn 65.
- Check your assessment notice. Compare the assessor’s value with recent sales of similar homes. If it is too high, you can usually appeal within a short window, often 30 to 60 days after the notice.
- Budget for increases. Use the growth setting under More options to see how the bill rises if your home’s value climbs.
- Count property tax when you buy. Two homes at the same price can have very different tax bills. Add the tax to your payment with the mortgage calculator or check your budget with the house affordability calculator.
Property tax, escrow and your income tax
Most lenders collect property tax monthly through an escrow account and pay the bill when it is due. At closing, you usually prepay a few months into escrow, which the closing cost calculator includes. If your tax rises, your lender raises your monthly escrow payment after its yearly review.
Property tax on your home is deductible on your federal return if you itemize, together with state and local income or sales tax, up to the SALT cap. Most people take the standard deduction instead; the income tax calculator shows which is bigger for you.
This calculator gives an estimate. Your local assessor and tax collector set the actual amount you owe.