Why use this calculator
Property tax is the second largest ongoing cost of owning a home and the one buyers most often estimate from a rule of thumb. The trouble is that three separate numbers stand between a house price and a tax bill. Market value is not assessed value, because many states tax only a fraction of what a property is worth.
Assessed value is not taxable value, because homestead, senior, veteran and disability exemptions come off first. And the rate itself is a stack of county, city, school district and special district levies rather than one figure. This calculator works through all three steps, shows the effective rate against market value so you can compare one county with another honestly, and projects the bill forward under whatever assessment cap your state applies. It is also how you find out whether an exemption you have never claimed is worth several thousand dollars.
How to use it
- Enter the market value of the property, using a recent sale price or the assessor's market value rather than your loan balance.
- Set the assessment ratio for your state: leave it at 100% if the full value is taxed, or use the published fraction if not.
- Add every levy on your tax bill together and enter the combined rate, since county, city, school and special districts each appear as a separate line.
- Enter the homestead exemption amount your assessor publishes for a primary residence.
- Answer the age question, and if anyone on the title is 65 or over, add the senior or disability exemption amount as well.
- Finally set an expected annual growth rate for local values and the annual assessment increase cap your state applies, which together drive the ten-year projection under the results.
What each result means
- Annual property tax
- The full-year bill at these settings. Many counties bill in two instalments and offer a small discount for paying early.
- Monthly escrow amount
- One twelfth of the annual bill. Lenders usually collect this with the mortgage payment and hold it until the tax falls due.
- Assessed value
- Market value multiplied by the state assessment ratio. It is the base the tax rate applies to, before exemptions.
- Taxable value
- Assessed value after every exemption has been deducted. This is the figure printed on your tax bill.
- Exemptions applied
- The total dollar amount removed from assessed value, capped so exemptions can never exceed the assessed value itself.
- Tax saved by exemptions
- Cash the exemptions keep in your pocket each year. Almost all of them require an application and are not granted automatically.
- Effective rate on market value
- Tax as a percentage of what the property is worth. The only honest way to compare counties with different assessment ratios.
- Equivalent mill rate
- The same rate expressed as dollars per $1,000 of taxable value, which is the format most US tax bills use.
- Ten-year total under the cap
- Cumulative tax across ten years if values grow as entered and the assessment cap holds. Resets on sale in most capped states.
The formula
Assessed value = market value × assessment ratio
Taxable value = assessed value − exemptions, floored at zero and never more than the assessed value itself
Annual tax = taxable value × combined rate
Monthly escrow = annual tax ÷ 12
The effective rate is annual tax ÷ market value, which is what makes counties comparable when assessment ratios differ. A mill is one dollar of tax per thousand dollars of taxable value, so the mill rate is simply the percentage rate × 10. In the projection, assessed value grows by the lesser of market growth and the statutory cap, and can never exceed market value × ratio.
How this number is used in practice
Effective rates vary more across the United States than almost any other housing cost. Owners in New Jersey and Illinois routinely pay above two per cent of market value a year, while Hawaii, Alabama and Colorado sit well under one per cent. On a $420,000 home that is a difference of roughly $6,000 a year, every year, which over a decade dwarfs most of the negotiating that happens on the purchase price.
Comparing headline rates between states is meaningless without the assessment ratio: a three per cent rate applied to forty per cent of value is a lower burden than a 1.3 per cent rate applied to the full value. Always compare on effective rate.
Exemptions and caps are where the real money sits, and both usually need an application. A homestead exemption removes a fixed amount from assessed value for a primary residence, and senior, veteran and disability exemptions stack on top in many counties. Separately, several states cap how fast assessed value can rise: California's Proposition 13 limits it to two per cent a year, and Florida's Save Our Homes limits it to three per cent or inflation, whichever is lower.
Over a long holding period that gap compounds, which is why two identical houses in the same street can carry very different tax bills depending on when each was last sold. In most capped states, the assessment resets to full market value on sale, so the previous owner's bill is a poor guide to yours.
If you think the assessment is too high, appeal it. Most counties open a short window each year, typically thirty to sixty days after notices go out, and the evidence that works is boring and specific: three or four comparable sales from the same neighbourhood near the assessment date, photographs of deferred maintenance, and any error in the recorded square footage, bedroom count or lot size.
Appeals succeed often enough to be worth the afternoon, and a successful reduction carries forward into every future year rather than being a one-off refund.
Worked examples
$420,000 home, full value assessed, 1.1% combined rate, no exemptions
Annual tax of $4,620.00 and a monthly escrow of $385.00, an effective rate of 1.10%.
The same home with a $50,000 homestead exemption claimed
Annual tax falls to $4,070.00, saving $550.00 a year for a single application.
$350,000 home assessed at 40% of value with a 2.8% rate and a senior exemption of $25,000
Annual tax of $3,220.00. The low assessment ratio makes a high headline rate affordable.
$600,000 home in a 2% cap state with values rising 6% a year
Year one tax of $6,600.00, with the assessment falling steadily behind market value under the cap.
When people use it
- Budgeting the escrow line before you commit to a purchase
- Comparing two counties honestly on effective rate rather than headline rate
- Checking what a homestead, senior or veteran exemption is actually worth
- Projecting the bill forward in a state with an assessment cap
- Building evidence for an assessment appeal after a notice arrives
Tips
- Apply for the homestead exemption the year you move in. It is never automatic and most counties will not backdate it.
- Compare counties on effective rate, not headline rate. A high rate on a low assessment ratio can be the cheaper option.
- In a capped state, never use the seller's tax bill to budget. The assessment usually resets to full market value on sale.
- Read the assessment notice the week it arrives. Appeal windows are short, often thirty to sixty days, and there is no extension.
- An appeal needs comparable sales near the assessment date, not current listings. Three or four solid comparables beat a long argument.
- Check the recorded square footage, bedroom count and lot size on your property card. Clerical errors are common and correcting one is the easiest win available.
- If an owner turns 65 during the year, ask about the senior exemption or freeze immediately. Many counties apply it from the following bill only.
What it assumes, and where it stops being accurate
- This models US ad valorem property tax. Australia uses state land tax on unimproved land value with a tax-free threshold, and the UK uses council tax bands, so neither is represented here.
- The combined rate is treated as a single figure. Real bills stack county, city, school district and special assessments, and special district levies can change independently.
- Exemptions are applied as flat dollar reductions to assessed value. Some states instead apply percentage exemptions, rate reductions or a tax freeze, which behave differently.
- The projection assumes the cap holds and the property is not sold. In most capped states a sale resets the assessment to full market value immediately.
- Non-ad-valorem charges such as solid waste, drainage, street lighting and community development district fees appear on many tax bills and are not included.
- Circuit breaker credits, deferral programs and income-tested rebates for seniors are not modelled and can materially reduce the amount actually payable.
Terms used on this page
- Ad valorem tax
- A tax charged as a percentage of the value of the property being taxed.
- Assessment ratio
- The fraction of market value a state subjects to property tax.
- Mill
- One dollar of tax per $1,000 of taxable value; twenty mills equals two per cent.
- Homestead exemption
- A reduction in taxable value granted on an owner's primary residence, usually by application.
- Assessment cap
- A statutory limit on how much assessed value can rise in one year, such as 2% in California or 3% in Florida.
Questions people ask
- What is the difference between market value and assessed value?
- Market value is what the property would sell for. Assessed value is the portion your state chooses to tax, calculated as market value times the assessment ratio. Many states assess at full value, but others use a fraction, around ten per cent in Alabama and forty per cent in Georgia, which is why headline rates are not comparable between states.
- What is a homestead exemption and how do I get one?
- It removes a fixed dollar amount from the assessed value of your primary residence, cutting the tax bill every year you hold the property. You must apply through the county assessor, usually once, with proof of occupancy and identification. Deadlines are early in the year in most states, and counties rarely backdate a late application.
- Why is my tax bill higher than the previous owner's?
- Because in most states with an assessment cap the assessed value resets to full market value when a property sells. The previous owner may have held the home for twenty years with increases limited to two or three per cent a year. Their bill reflects that history, not your purchase price.
- How often is property reassessed?
- It varies widely. Some counties reassess every year, others on a two, three or five-year cycle, and a few only on sale or after major improvements. Between reassessments the rate can still change, because school districts and municipalities set their levies annually against their own budgets.
- Can I appeal my assessment, and does it work?
- Yes, and often enough to be worth trying. File within the appeal window shown on your assessment notice, usually thirty to sixty days. Bring three or four comparable sales near the assessment date, photographs of any condition problems, and corrections to the recorded square footage or room count. A successful appeal lowers every future bill, not just this one.
- What is a mill rate?
- One mill is one dollar of tax per thousand dollars of taxable value, so twenty mills equals two per cent. Most US tax bills express rates in mills because the levies of several districts add together more cleanly that way. To convert, multiply a percentage rate by ten.
Use this with
Property Tax Calculator answers one part of the question. These pick up where it stops: Home Affordability Calculator, Mortgage Calculator, Stamp Duty Calculator and Rent vs. Buy Calculator.
Where these figures come from
Figures and rules on this page follow United States federal rules.
- Lincoln Institute of Land Policy. Fifty-state property tax comparison and effective rate research
- Tax Foundation. State and county effective property tax rate data
- US Census Bureau. American Community Survey property tax statistics
Property Tax Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.