Property & ownership costs
How to Estimate Property Tax on a House in the US
By the HomeCalc USAReviewed against our editorial policyLast updated US units and pricing
Annual property tax = assessed value x assessment ratio x local tax rate, minus exemptions. A $400,000 home assessed at 100% of value in a county with a 1.1% effective rate and a $25,000 homestead exemption owes about $4,125 a year, or roughly $344 a month in escrow.
Skip the arithmetic: use the Property Tax Calculator.
Key takeaways
- Market value and assessed value are different numbers. Many states assess at a fixed ratio of market value (for example 10%, 40% or 100%), and the ratio, not the sale price, drives the bill.
- Local rates are quoted either as a percentage or in mills. One mill is $1 of tax per $1,000 of taxable value, so 11 mills equals 1.1%.
- Exemptions — homestead, senior, veteran, agricultural — come off taxable value before the rate is applied, not off the final bill.
- Effective rates range from roughly 0.3% (Hawaii, Alabama) to over 2% (New Jersey, Illinois), so national averages are a poor proxy for your county.
- Lenders usually collect tax monthly through escrow, then adjust the payment each year after the county issues new assessments.
The formula US counties actually use
Every US property tax bill is built from the same three inputs, even though the labels differ by state. The county assessor sets a value, state law converts that value into a taxable amount, and every overlapping taxing district (county, city, school, fire, library) adds its own rate on top.
- Find the assessed value on your assessor's notice or the county property search. Do not start from Zillow — assessments lag the market, sometimes by years.
- Apply the assessment ratio if your state uses one. In Georgia, taxable value is 40% of fair market value; in California it is the Proposition 13 base year value; in many states it is 100%.
- Subtract exemptions you qualify for, such as a homestead exemption, to get net taxable value.
- Add up every district's rate that applies to the parcel. This combined figure is the millage rate.
- Multiply net taxable value by the combined rate. Divide by 12 for the monthly escrow contribution.
Worked example: a $400,000 house
Assume a market value of $400,000, a 100% assessment ratio, a combined rate of 11 mills (1.1%), and a $25,000 homestead exemption.
Net taxable value is $400,000 minus $25,000, or $375,000. Tax is $375,000 x 0.011 = $4,125 for the year. Divided by twelve, the lender collects about $344 a month, and typically pads the escrow cushion by two months as allowed under RESPA.
If the same house sat in a state assessing at 40% of market value, taxable value would be $160,000 before exemptions, and the same 11 mills would produce a bill near $1,760 — which is why comparing millage rates between states tells you almost nothing on its own.
Typical effective rates by state
Effective rate means tax paid divided by market value — the figure that lets you compare across states with different assessment ratios.
| State | Typical effective rate | Tax on a $400,000 home |
|---|---|---|
| Hawaii | ~0.30% | ~$1,200 |
| Alabama | ~0.40% | ~$1,600 |
| Arizona | ~0.60% | ~$2,400 |
| Florida | ~0.80% | ~$3,200 |
| North Carolina | ~0.80% | ~$3,200 |
| Ohio | ~1.35% | ~$5,400 |
| Texas | ~1.60% | ~$6,400 |
| Illinois | ~2.05% | ~$8,200 |
| New Jersey | ~2.20% | ~$8,800 |
Why your estimate and the actual bill differ
- Reassessment cycles: some counties reassess annually, others every three to five years, so a recent purchase can reset the value sharply.
- Sale-triggered uncapping: in states with assessment caps, buying the house removes the previous owner's cap and the new bill can jump well above what the seller paid.
- Special assessments: sewer districts, road bonds and Mello-Roos style community facilities districts appear as separate line items.
- Exemption timing: homestead exemptions often must be filed by a spring deadline and do not apply retroactively to your first partial year.
- Voter-approved levies: school bonds passed in November change next year's millage.
Checking your assessment before you appeal
- Pull the property record card from the county assessor and verify square footage, bedroom and bath counts, lot size and any recorded improvements.
- Compare your assessed value per square foot with three to five recent arm's-length sales of similar homes in the same assessment neighborhood.
- Note the appeal window — most counties allow 30 to 60 days after the valuation notice and nothing after it closes.
- File with evidence, not opinion: closing statements, contractor estimates for deferred repairs and comparable sale records carry weight; a tax increase alone does not.
Frequently asked questions
Is property tax based on purchase price?
Not directly in most states. It is based on the assessor's value, which may trail the purchase price for years. In California, though, a sale generally resets the Proposition 13 base year value to the purchase price, so the two line up right after closing.
What is a mill rate?
A mill is $1 of tax per $1,000 of taxable value. A 25-mill rate equals 2.5%. Divide mills by 10 to get the percentage rate.
Do property taxes go up every year?
Usually, but through two separate mechanisms: rising assessed values and rising district rates. Several states cap annual assessment growth for owner-occupied homes, which limits how fast the taxable value can climb even when the market moves faster.
How much property tax will my lender escrow?
One twelfth of the annual bill each month, plus a cushion of up to two months that federal escrow rules allow. Lenders re-run the analysis every year and refund or bill the difference.
Sources and references
- Consumer Financial Protection Bureau — Escrow accounts — How monthly tax and insurance collection works.
- US Census Bureau — American Community Survey, real estate taxes paid — Source data behind state-level effective rate comparisons.
- IRS Topic No. 503 — Deductible taxes — Federal treatment of state and local property tax, including the SALT cap.