What is Property Tax?

Property tax is a tax on real estate (land and buildings) levied by local governments (counties, cities, school districts, etc.) to fund public services like schools, roads, police, and fire departments. Property taxes are typically the largest source of revenue for local governments in the United States.

Assessed Value vs Market Value

Market value is what your home would sell for on the open market. Assessed value is the value used by your local government to calculate property taxes. Many jurisdictions assess properties at a percentage of market value (the assessment ratio). For example, if your home is worth $300,000 and the assessment ratio is 80%, your assessed value would be $240,000. Some areas assess at 100% of market value.

Understanding Tax Rates

Property tax rates can be expressed in two ways: as a percentage of assessed value (e.g., 1.2%) or as a mill rate (e.g., 12 mills = $12 per $1,000 of assessed value). One percent equals 10 mills. Rates vary widely by location and are set by local governments based on their budget needs. Combined rates often include county, city, and school district taxes.

Homestead and Other Exemptions

Many jurisdictions offer exemptions that reduce your assessed value before calculating tax. The most common is a homestead exemption for primary residences, which can reduce assessed value by a fixed amount (e.g., $25,000 or $50,000). Other exemptions may be available for seniors, veterans, or disabilities. Exemptions vary by state and locality.

Why Actual Bills May Differ

This simplified tool does not account for all factors that affect actual property tax bills, including: special assessments and fees, local exemptions you may qualify for, reassessment cycles and timing, appeal processes and adjustments, local tax caps or limits, changes in tax rates during the year, jurisdiction-specific rules and calculations, and many other complexities. Actual tax bills may differ significantly from these estimates.