Property Tax Calculator

How property tax actually works

Property tax is the single biggest source of revenue for local US governments — school districts, counties, municipalities, fire protection districts, water districts. There is no federal property tax. Each parcel pays into multiple overlapping taxing jurisdictions simultaneously, with the combined effective rate ranging from under 0.3% of market value (Hawaii, Alabama) to over 2% (New Jersey, Illinois).

The basic mechanic is three numbers multiplied together:

1. 1. Market value — what your home would sell for in an arm's-length transaction. Determined by the county assessor through periodic appraisal, comparable sales, or self-reporting depending on the state.
2. 2. Assessment ratio — the fraction of market value that gets taxed. Most states use 100% (taxable value = market value), but a few use much lower ratios: Alabama 10%, Mississippi 10%, South Carolina 4% for owner-occupied homes, Arkansas 20%, Tennessee 25%. The headline "low assessment ratio" doesn't mean lower tax — the millage rate compensates upward.
3. 3. Millage rate (or tax rate) — expressed in dollars per $1,000 of assessed value. A 30-mill rate equals 3.0% of assessed value. Mills come from layering together each taxing jurisdiction's levy: school district + county + city + special districts.

Worked example: a $400,000 home in Birmingham, Alabama (10% assessment ratio, ~60 mills combined). Taxable value = $400,000 × 10% = $40,000. Annual tax = $40,000 × 60/1000 = $2,400. The "effective tax rate" — what most rate-comparison tables publish — is $2,400 ÷ $400,000 = 0.60%. Meanwhile, a $400,000 home in Newark, New Jersey (100% assessment ratio, ~25 mills) pays $400,000 × 1.0 × 25/1000 = $10,000 — a 2.5% effective rate.

Average effective property tax rates by state

"Effective rate" is the metric to compare across states because it normalizes away assessment-ratio differences. Source: Tax Foundation analysis of US Census Bureau Annual Survey of State and Local Government Finances; effective rate = annual property tax ÷ median home value.

State rate alone is misleading without home values. Hawaii's 0.27% on a median $730,000 home produces a similar dollar tax ($1,970) to Alabama's 0.37% on a median $215,000 home ($795). High-cost coastal states with "moderate" rates often have the highest dollar bills.

Assessment caps and Proposition 13

Several states cap how fast assessed value can grow year-over-year, independent of how fast market value grows. This protects long-term owners from getting taxed out of appreciating neighborhoods, but creates a "lock-in" effect where moving means a step-up to current market value at the new home.

• California (Prop 13, 1978). Assessed value reset to market price at purchase, then capped at 2% annual growth thereafter. Effective rate capped at 1% of original purchase price plus voter-approved bond add-ons. A buyer in 1985 paying $300,000 today pays tax on roughly $620,000 assessed; a 2025 buyer pays tax on the full $1.4M market value. New 1.0–1.25% effective rates.
• Florida (Save Our Homes, 1995). 3% / CPI annual cap on homestead-property assessment increases. Portability — owners can transfer up to $500,000 of "saved" assessment when they move, partially mitigating lock-in.
• Texas (10% homestead cap). Annual increase in homestead-property assessment capped at 10% per year. School districts also cap residence-homestead taxable value at $100,000 below market (the 2023 voter-approved increase).
• New York (NYC Class 1 8% / Nassau 6%). Annual increase in assessment capped on owner-occupied 1-3 family homes — but only within NYC and Nassau County under separate caps. Combined with state STAR exemption.
• Michigan (Proposal A, 1994). Assessment increase capped at lesser of 5% or CPI, until ownership transfers — at which point a "pop-up" reassessment to full market value occurs.

States without caps reassess annually to current market value. In rising markets, this produces predictable tax growth; in falling markets, ratable declines. Both California and Texas property owners face reassessment "pop-ups" when remodeling or transferring property.

Homestead, senior, and disability exemptions

Most states reduce taxable value for owner-occupied primary residences. Magnitudes vary wildly — a few hundred dollars to fully exempting the first hundred-thousand dollars of value. You usually must file an application after purchase to claim the homestead; missing the application window leaves money on the table.

• Texas school-district homestead. First $100,000 of homestead value exempt from school taxes (post-2023 voter approval). Additional $10,000 exemption at age 65+ or disabled, plus a tax-ceiling freeze.
• Florida $50,000 homestead. Two-layer: first $25,000 exempts all millages including school; second $25,000 exempts non-school. Plus the Save Our Homes 3% / CPI annual cap.
• Mississippi/Louisiana / Alabama "homestead credit" at low absolute dollars but combined with low base rates already.
• Senior freezes — Many states freeze taxable value at the year owner reaches age 65 (Illinois "senior assessment freeze") or impose income-tested deferral programs.
• 100% disabled veteran exemptions — Texas, Florida, Virginia, Pennsylvania and others completely exempt primary residence from property tax for 100% service-connected disability veterans.
• Circuit-breaker programs — income-based property-tax relief (cap on tax as % of income) operating as refundable credits on state income tax in MA, MI, NY, NJ, and others.

Federal deduction: SALT cap mechanics

Property tax is deductible on federal Schedule A as part of the State And Local Tax (SALT) deduction — together with state and local income tax (or sales tax if you elect that instead). OBBBA §70120 made significant changes effective 2025:

• Base cap raised to $40,000 ($20,000 MFS) — up from the TCJA $10,000 cap that applied 2018–2024. Indexed by ~1% per year, so $40,400 in 2026.
• 30% phaseout above $500,000 MAGI ($250,000 MFS). For each dollar of MAGI above the start, the cap shrinks by 30 cents — until it hits the floor.
• Floor of $10,000 ($5,000 MFS) — the cap can never drop below this regardless of MAGI. So high-income filers always get at least the pre-OBBBA cap.
• Itemize-only. Standard-deduction filers can't claim SALT at all. For 2025, the standard deduction ($15,750 single / $31,500 MFJ) is high enough that only filers with substantial combined property tax + state income tax + mortgage interest + charity + medical itemize.

Use the itemized vs standard calculator to compare; the Schedule A calculator models the full itemized stack including the SALT cap phaseout. State-level SALT-cap workarounds (PTET — pass-through entity tax — elections in 36+ states) shift state tax to the business return, escaping the cap, but only for business owners.

Worked examples — same home, different states

Comparing a $600k home: NJ owner pays $11,760 more per year than a HI owner. Over 30 years of ownership (ignoring inflation and rate changes) that's $353,000. Property tax is a major part of total housing cost — bigger than insurance in most states, and comparable to or larger than mortgage interest in low-coupon markets.

If you think your assessment is wrong

Every state has a property tax appeal process, typically with a hard annual deadline (30–90 days after assessment notice). Studies suggest 40–60% of appealed assessments result in a reduction, but only a small fraction of owners actually appeal. The mechanic is straightforward in principle and procedurally messy in practice:

1. 1. Compare your assessment to recent comparable sales. Pull 3-5 closed sales of similar homes in the past 6-12 months. If your assessment exceeds those by >10-15%, you have an appeal case.
2. 2. Check the assessor's classification. Verify lot size, square footage, year built, bedrooms, bathrooms. Errors in basic facts are common and easy to fix.
3. 3. File the formal appeal. Most states have an informal review followed by a board of equalization hearing followed by state tax court — work the path from cheapest to most expensive.
4. 4. Be ready to wait. Even successful appeals usually apply to the current year only — last year's overpayment is gone unless you appealed within the deadline.

Senior, disability, and circuit-breaker programs usually have ANNUAL application requirements — missing a year of paperwork forfeits a year of relief. Most local assessor offices publish exemption applications online; the time investment is typically under 30 minutes per filing.

Sources

• U.S. Census Bureau — Annual Survey of State and Local Government Finances
• Tax Foundation — Property Tax Rates by State