The basic formula: assessed value times tax rate
Property tax is calculated by multiplying your property's assessed value by the tax rate set by your local government. The assessed value is not what you paid for the house or what it would sell for today — it is a value assigned by your county assessor's office, usually based on a percentage of market value. The tax rate is expressed as a dollar amount per $1,000 or $100 of assessed value, and it varies by county, city, and school district.
The math looks like this: if your home is assessed at $300,000 and your tax rate is $12 per $1,000 of value, you multiply $300,000 by 0.012 to get $3,600 in annual property tax. That $3,600 is then divided into monthly or quarterly payments, depending on your local system.
Key Takeaways
- Assessed value is set by your county assessor and is usually a fraction of what your home would sell for, not the price you paid.
- Tax rate is set by your local government and varies by county, city, and school district — you can find yours on your tax bill or assessor's website.
- The calculation is: assessed value × tax rate = annual property tax.
- Most counties reassess property every one to three years, so your assessed value and tax bill can change even if you make no improvements.
- Homestead exemptions, senior exemptions, and other local programs can lower your assessed value before the tax rate is applied.
How assessed value is determined
Your county assessor's office assigns an assessed value to your property, usually by looking at recent sales of similar homes in your area, the condition of your building, and any improvements you have made. The assessor does not visit every property every year — most counties use a cycle of one to three years between full reassessments. In the years between reassessments, the value may be adjusted by a small percentage or held flat, depending on your state's rules.
The assessed value is typically a percentage of the property's market value. In some states this percentage is set by law — for example, Florida assesses residential property at 100 percent of just value, while California caps increases at 2 percent per year unless the property changes hands. In other states, the assessor has more discretion. You can find your property's assessed value on your tax bill, on your county assessor's website, or by calling the assessor's office directly.
If you believe your assessed value is too high, most counties allow you to file a formal challenge called an appeal or protest. The process and deadline vary by state, but typically you must file within 30 to 60 days of receiving your tax bill. You will need to provide evidence — recent appraisals, comparable sales, or photos of damage or neglect — to support your claim that the value is wrong.
Where the tax rate comes from
The tax rate is set by your local government and is usually expressed as a mill rate or as a dollar amount per $1,000 of assessed value. A mill is one-tenth of a cent, so a rate of 12 mills means $0.012 per dollar of assessed value, or $12 per $1,000. Your tax bill shows the rate, and you can also find it on your county assessor's or tax collector's website.
The tax rate is not the same everywhere. It depends on the needs and budget of your county, city, and school district. A property in one county might have a rate of $10 per $1,000, while an identical property across the county line might have a rate of $15 per $1,000. Some states cap how much the rate can increase year to year, while others allow it to rise with the local government's budget needs.
How exemptions lower your tax bill
Many states and counties offer exemptions that reduce your assessed value before the tax rate is applied. A homestead exemption is the most common — it lowers the assessed value of your primary residence by a set amount, usually $25,000 to $50,000, though this varies widely by state. To claim a homestead exemption, you typically file a form with your county assessor's office and provide proof that you own and live in the home. The deadline is usually in the spring, and you must reapply every few years or whenever you move.
Other exemptions may be available if you are over a certain age, disabled, a veteran, or a widow or widower. Agricultural land, religious property, and nonprofit buildings often receive exemptions as well. Each exemption reduces the assessed value, which then lowers the amount the tax rate is applied to. For example, if your home is assessed at $300,000 and you receive a $50,000 homestead exemption, the tax is calculated on $250,000 instead.
You must claim exemptions yourself — the assessor's office does not automatically grant them. Contact your county assessor to find out which exemptions you may be may have access to to and what documents you need to provide.
What happens when property changes hands
In most states, the assessed value is updated when a property is sold. The new owner's purchase price becomes the basis for the new assessed value, or the assessor uses the sale price to update the market value estimate. This is called a reassessment on transfer or revaluation on sale. Some states, like California, limit how much the value can increase even after a sale — California's Proposition 13 caps increases at 2 percent per year unless the property changes ownership.
If you buy a home, expect your assessed value to be set based on what you paid or what the assessor believes it is worth, whichever is higher. Your first tax bill as the owner may be significantly different from the previous owner's bill. Check your assessment notice carefully and contact the assessor if you think the value is wrong.
Reading your tax bill and finding your rate
Your property tax bill shows the assessed value, the tax rate, and the total tax owed. It may also show any exemptions you are receiving and the breakdown of how your tax dollars are split among the county, city, school district, and other local services. The bill usually comes once or twice a year, depending on your county's schedule.
To find your tax rate, look for a line labeled "millage rate," "tax rate," or "rate per $1,000." If your bill does not show the rate clearly, call your county tax collector's office — they can tell you the exact rate and explain how it was calculated. You can also find the rate on your county assessor's or tax collector's website, often in a public records section.
Frequently Asked Questions
Why did my property tax bill go up if I did not make any improvements?
Your assessed value can increase during a reassessment cycle even if you made no changes to the property. The assessor updates values based on market conditions and comparable sales in your area. Some states also allow the tax rate itself to increase year to year. If you believe the increase is wrong, you can file an appeal with your assessor's office.
Can I lower my property tax by lowering my home's value?
You cannot deliberately lower your home's market value to reduce taxes. However, if your home has damage, is in poor condition, or has structural problems, the assessor should account for that when setting the value. If you believe your home is assessed higher than its actual condition warrants, file an appeal and provide evidence such as an inspection report or repair estimates.
What is the difference between assessed value and market value?
Market value is what your home would sell for on the open market today. Assessed value is what the assessor determines for tax purposes, and it is usually lower than market value. In some states, assessed value is set by law as a percentage of market value — for example, 80 or 90 percent. In others, the assessor has discretion.
How often does the assessor reassess my property?
Reassessment cycles vary by state and county, typically ranging from every year to every three years. Some counties reassess all properties on the same schedule, while others use a rotating system. You can find your county's reassessment cycle on the assessor's website or by calling the office directly.
Do I have to pay property tax if I own my home outright?
Yes. Property tax is owed by the owner of the property, whether the home is paid off or financed. If you have a mortgage, your lender may require you to pay property tax through an escrow account as part of your monthly payment. If you own the home outright, you pay the tax bill directly to your county tax collector.