How Much Is Property Tax? Average Costs and How To Estimate Yours 

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Property taxes are usually levied and set at the local level, so they vary from one city or county to another. But all states have property taxes, so it’s important to know how they’re calculated and how much you’ll pay.

What Is Property Tax and What Does It Pay For?

Property tax is a tax on real property, meaning land and buildings, rather than personal property like vehicles or income. While states set the overall framework, local governments — such as counties, cities and school districts — levy and collect property taxes based on the value of a home or other real estate.

Homeowners in all 50 states and the District of Columbia typically pay property taxes to one or more local entities. Those funds are a major source of revenue for local governments and are used to support services like public schools, police and fire departments, libraries, sanitation services and community facilities.

How Property Tax Is Calculated

How much you pay in property tax depends on your home’s assessed value and the tax rate for your city, county and/or school district. Here’s how it works.

Step 1: Determine Your Property’s Assessed Value

State and local governments assess homes based on factors like sales of similar properties in the same area and, in some cases, the cost to build the home.

Unlike market value — what your home could sell for — assessed value is calculated by a tax assessor and used strictly for tax purposes.

In some locations, assessment value equals market value. In others, it’s expressed as a percentage of market value. For example, if your home is worth $400,000 and your county assesses property at 50% of market value, your assessed value would be $200,000.

Step 2: Find Your Local Tax Rate

Property tax rates are typically expressed as millage rates, which represent the amount of tax owed per $1,000 of assessed value. Local governments often combine multiple millage rates into a single total rate.

Step 3: Apply the Millage Rate to Your Assessed Value

One mill equals $1 for every $1,000 of assessed value. For example, if your total millage rate is 8.0 and your home is assessed at $300,000, your annual property tax would be $2,400 ($8 X 300).

At a Glance Example

Here’s a look at how property tax might be calculated for a home worth $300,000.

You can refer to your county and city websites to find out your tax rate and learn about your local jurisdiction’s assessment process.

What Is an ‘Effective Property Tax Rate’?

Since assessed values vary by location, it can be hard to compare property taxes directly. Effective tax rates simplify the comparison by expressing property taxes as a percentage of market value.

How Much Is Property Tax by State?

States set the assessment framework, but local governments set property tax rates. According to a Tax Foundation analysis of 2023 Census data, these states have the highest effective property tax rates on owner-occupied housing.

Which States Have the Lowest Property Taxes?

Here are the 10 states with the lowest property taxes:

How Property Taxes Affect Your Monthly Housing Payment

When you apply for a mortgage, the lender includes property taxes when calculating how big a payment you can afford. Later, 1/12 of your tax will typically be added to each mortgage payment and the money will be held in escrow until your tax bill is due. Escrow ensures that the money will be there when needed and allows the lender to pay the bill on your behalf.

If you don’t have a tax escrow, monthly deposits of 1/12 of the annual tax into a dedicated savings account can help you budget for the expense. It can also be helpful to set reminders for the due dates, because most people pay property tax just once or twice per year.

Can You Lower Your Property Tax Bill?

You can’t change your tax rate, but there are ways to reduce your bill. One of the most common is with a homestead exemption that exempts some of your primary home’s assessed value from taxation.

Special exemptions might be available for some homeowners, including:

• Veterans and active-duty service members
• Homeowners with disabilities — including disabled veterans
• Senior citizens — based on local qualifying age

If you believe your tax assessment is too high compared to comparable homes in your neighborhood, you can appeal it. However, you’ll need documentation for your claim, and in rare cases, an appeal can backfire and actually increase the tax. That happens when an assessor visits a property to reevaluate and finds improvements not included in the current assessment.

Most states require that you appeal within a certain period after you receive your assessment notice.

Key Terms To Know

Here are some important terms to remember as you gather information to estimate your own tax.

• Appeal: A challenge against a property assessment, usually to reduce the assessed value
• Assessment: An estimate of a home’s value used to calculate property tax
• Assessed value: The dollar amount on which property tax is calculated
• Effective tax rate: The dollar amount of tax expressed as a percentage of the home’s market value
• Market value: The value of a home if sold on the open market
• Mill: 1/1000 of a dollar, used to express property tax rate
• Property tax: Tax levied by local governments to raise revenue for public services and facilities
• Tax rate: The percentage or millage of your home’s assessed value that you pay in tax

Bottom Line

Property taxes are a big part of homeownership responsibilities, regardless of where you live.

• It’s the primary way local governments raise revenue.
• Local governments set their own rates, so property taxes vary by county, city and even school district.
• Calculate your property tax by multiplying your tax rate by your home’s assessed value. Remember to account for any exemptions you qualify for.
• If your mortgage lender doesn’t include property tax in your mortgage payments, you can budget for it by setting aside 1/12 of the amount each month in a savings account reserved for that purpose.
• Watch for assessment notices and tax bills so you can check them for accuracy and keep track of when your taxes are due.

Kathy Evans contributed to the reporting for this article.

For this piece, GOBankingRates looked at the Tax Foundation’s “Property Tax by State and Country, 2025” analysis to find effective property tax rates for each state. All data was collected on and up to date as of Jan. 16, 2026.

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