What is the Property Tax?
Property tax is levied by local government on the assessed value of your home, funding schools, roads and emergency services. Effective rates vary enormously by state and even by district, with Hawaii among the lowest in the country and New Jersey and Illinois among the highest — check your county assessor for the rate that actually applies to you.
Many jurisdictions assess at a fraction of market value, and homestead exemptions reduce the taxable amount for primary residences.
Formula & worked example
Annual tax = Assessed value × tax rate
Worked example: a 450,000 home assessed at full value with a 1.1% rate produces an annual bill of 4,950, or 412.50 a month in escrow. With 3% annual appreciation, the ten-year total comes to roughly 56,750 — a cost most buyers underestimate badly.
How to use this property tax calculator
- Enter your home's market value.
- Set the assessment ratio — many areas assess below market value.
- Use your local combined rate (sometimes quoted in mills: 11 mills = 1.1%).
- Deduct any homestead or senior exemption you qualify for.
Smart tips
- Property tax never goes away. Unlike a mortgage, it continues for as long as you own the home.
- Appeal your assessment if comparable sales suggest it is too high — appeals succeed more often than people expect.
- Claim every exemption available: homestead, senior, veteran and disability exemptions are frequently missed.
- Compare effective rates when choosing between areas — a cheaper home in a high-tax district can cost more overall.
- Property tax is deductible federally as part of the SALT deduction, subject to the annual cap.
Frequently asked questions
How is property tax calculated?
Assessed value multiplied by the local tax rate. Assessed value is market value times the assessment ratio, less any exemptions.
What is a mill rate?
Tax per 1,000 of assessed value. A rate of 11 mills equals 1.1% of assessed value.
Can I appeal my property tax assessment?
Yes. Most jurisdictions allow appeals within a set window, and comparable sales evidence is the strongest argument.
What is a homestead exemption?
A reduction in taxable value for a primary residence, available in many states and often requiring a one-time application.
Want the theory behind the numbers? Read our US housing guides on the Money Blog.
Written by Gurjeet Singh, Sharpen Solutions. Last reviewed 8 Sep 2026. How we check these numbers.