How property tax works
Property tax is levied by local governments (counties, cities, school districts) based on the value of real estate you own. The formula:
Annual Tax = (Home Value − Exemptions) × Tax Rate
Property taxes fund schools, roads, fire departments, and other local services. Rates vary dramatically — from 0.28% in Hawaii to over 2.2% in New Jersey. On a $400,000 home, that's the difference between $1,120 and $9,040 per year.
Tip: The rates in this calculator are state-wide averages. Your actual rate depends on your specific county and taxing districts. Use the custom rate field for a more precise estimate.
Property tax rates by state
Effective property tax rates by state — sorted highest to lowest. Effective rate = actual tax paid ÷ home market value:
| State | Eff. Rate | Median Tax |
|---|---|---|
| New Jersey (NJ) | 2.26% | $9,076 |
| Illinois (IL) | 1.97% | $4,942 |
| Connecticut (CT) | 1.96% | $6,476 |
| New Hampshire (NH) | 1.86% | $6,372 |
| Vermont (VT) | 1.83% | $5,230 |
| Wisconsin (WI) | 1.63% | $3,796 |
| Texas (TX) | 1.60% | $4,300 |
| Nebraska (NE) | 1.57% | $3,340 |
| New York (NY) | 1.46% | $6,280 |
| Pennsylvania (PA) | 1.43% | $3,440 |
| Iowa (IA) | 1.40% | $2,650 |
| Rhode Island (RI) | 1.37% | $4,378 |
| Ohio (OH) | 1.36% | $2,770 |
| Michigan (MI) | 1.33% | $2,754 |
| Kansas (KS) | 1.31% | $2,510 |
| Maine (ME) | 1.18% | $3,070 |
| South Dakota (SD) | 1.15% | $2,690 |
| Alaska (AK) | 1.12% | $3,680 |
| Massachusetts (MA) | 1.12% | $5,618 |
| Minnesota (MN) | 1.01% | $3,024 |
| Maryland (MD) | 0.99% | $3,680 |
| North Dakota (ND) | 0.94% | $2,130 |
| Missouri (MO) | 0.88% | $1,808 |
| Oregon (OR) | 0.87% | $3,528 |
| Oklahoma (OK) | 0.85% | $1,470 |
| Washington (WA) | 0.84% | $4,358 |
| Georgia (GA) | 0.83% | $2,250 |
| Florida (FL) | 0.82% | $2,756 |
| Kentucky (KY) | 0.80% | $1,382 |
| Virginia (VA) | 0.80% | $2,780 |
| Indiana (IN) | 0.79% | $1,478 |
| Montana (MT) | 0.74% | $2,580 |
| North Carolina (NC) | 0.73% | $2,050 |
| California (CA) | 0.71% | $4,665 |
| New Mexico (NM) | 0.67% | $1,530 |
| Mississippi (MS) | 0.65% | $872 |
| Arizona (AZ) | 0.60% | $1,898 |
| Idaho (ID) | 0.58% | $1,980 |
| Utah (UT) | 0.58% | $2,450 |
| Arkansas (AR) | 0.57% | $878 |
| West Virginia (WV) | 0.57% | $768 |
| Tennessee (TN) | 0.56% | $1,520 |
| District of Columbia (DC) | 0.56% | $3,830 |
| Delaware (DE) | 0.55% | $1,756 |
| Louisiana (LA) | 0.55% | $988 |
| South Carolina (SC) | 0.55% | $1,372 |
| Wyoming (WY) | 0.55% | $1,580 |
| Nevada (NV) | 0.53% | $2,062 |
| Colorado (CO) | 0.51% | $2,470 |
| Alabama (AL) | 0.39% | $658 |
| Hawaii (HI) | 0.28% | $2,340 |
Effective rates based on actual taxes paid relative to home values. Source: Tax Foundation, US Census.
Highest and lowest property tax states
Highest property tax
- New Jersey — 2.26% ($9,076/yr)
- Illinois — 1.97% ($4,942/yr)
- Connecticut — 1.96% ($6,476/yr)
- New Hampshire — 1.86% ($6,372/yr)
- Vermont — 1.83% ($5,230/yr)
Lowest property tax
- Hawaii — 0.28% ($2,340/yr)
- Alabama — 0.39% ($658/yr)
- Colorado — 0.51% ($2,470/yr)
- Nevada — 0.53% ($2,062/yr)
- Delaware — 0.55% ($1,756/yr)
How assessments work
Your property's assessed value is determined by a county assessor and may differ from market value. Some states assess at full market value; others use a fraction (e.g., Georgia assesses at 40% of market value). The tax rate is then applied to the assessed value. When we say "effective rate," we mean the actual tax paid relative to market value — the number that matters to homeowners.
Homestead exemption explained
A homestead exemption reduces the taxable value of your primary residence. For example, with a $50,000 exemption on a $350,000 home, you pay tax on only $300,000.
Example: $350,000 home in Texas (1.60% rate), $40,000 homestead exemption.
Without exemption: $350,000 × 1.60% = $5,600/year
With exemption: $310,000 × 1.60% = $4,960/year — saves $640
Exemption amounts vary widely by state. For example, Indiana's homestead exemption reduces assessed value by up to 60% (maximum $45,000) for a primary residence. Florida offers up to $50,000, and Texas provides a $100,000 school district exemption. Apply with your county assessor to receive the benefit.
Enter your exemption amount in the calculator above to see your actual tax after the deduction.
Are property taxes deductible?
Yes — property taxes are deductible on your federal tax return if you itemize. However, the SALT (State and Local Tax) deduction is capped at $10,000 per year ($5,000 married filing separately). This cap combines state income tax (or sales tax) plus property taxes. Many homeowners in high-tax states like New Jersey and Illinois exceed this cap.
How to appeal your property tax
- Review your assessment — check for factual errors (wrong square footage, lot size, bedroom count).
- Gather comparable sales — find 3–5 recent sales of similar homes in your area that sold for less than your assessed value.
- File a formal appeal — submit to your county's Board of Assessment Appeals before the deadline (typically 30–90 days after receiving your assessment notice).
- Present your case — bring your comparables, photos of any issues reducing value, and an independent appraisal if available.
- Consider hiring help — property tax appeal firms charge 25–50% of the savings but only if they win.
FAQs
How is property tax calculated?
Property tax = assessed value of the property × local tax rate. The assessed value is determined by a county assessor and may be a percentage of market value. Tax rates are set by local taxing authorities (county, school district, municipality) and expressed as a percentage or mill rate. This calculator uses effective rates (actual tax ÷ market value) for simplicity.
What state has the lowest property tax?
Hawaii has the lowest effective property tax rate at approximately 0.28%, followed by Alabama (0.39%), Colorado (0.51%), Nevada (0.53%), and several states clustered around 0.55%–0.58% (Delaware, Louisiana, South Carolina, Wyoming, Tennessee). However, low property tax states may have higher income or sales taxes to compensate.
What is a homestead exemption?
A homestead exemption reduces the taxable value of your primary residence. For example, a $50,000 homestead exemption on a $300,000 home means you only pay property tax on $250,000. Most states offer some form of homestead exemption, but amounts and eligibility vary widely — from $5,000 in some states to $75,000+ in Florida and Texas. You must apply with your county assessor.
Are property taxes deductible on federal taxes?
Yes — if you itemize deductions, you can deduct state and local property taxes on your federal return. However, the SALT (State and Local Tax) deduction is capped at $10,000 per year ($5,000 if married filing separately). This cap includes state income tax (or sales tax) plus property taxes combined. The SALT cap was enacted by the Tax Cuts and Jobs Act of 2017.
How can I lower my property tax?
Five approaches: 1) Apply for homestead and other exemptions (senior, veteran, disability). 2) Appeal your assessment if you believe your home is overvalued — compare with recent comparable sales. 3) Check your assessment for errors (wrong square footage, extra bedroom counted). 4) Be present during the assessor's inspection. 5) Some jurisdictions offer tax freezes for seniors.
How often is property assessed?
Assessment frequency varies by state: annually (most common), every 2–4 years, or when triggered by a sale or improvement. Some states reassess annually but limit the increase (California's Prop 13 caps increases at 2% per year until sale). Your tax bill reflects the assessed value times the current tax rate — both can change independently.
What is a mill rate?
A mill rate is a property tax rate expressed as dollars per $1,000 of assessed value. One mill = $1 per $1,000 = 0.1%. A mill rate of 25 means you pay $25 per $1,000 of assessed value, or 2.5%. To convert: mill rate ÷ 10 = percentage rate. This calculator uses percentage rates for clarity, but your tax bill may show mills.
Who pays property tax — the homeowner or the tenant?
The homeowner is legally responsible for paying property taxes. However, landlords typically factor property tax into rent, so tenants indirectly pay through higher rent. Some jurisdictions offer renter's credits on state income tax returns to offset this indirect burden. If property taxes go up, landlords often raise rent accordingly.
Do property taxes increase every year?
Property taxes can increase for two reasons: 1) Your assessed value goes up (due to rising home prices or improvements), and/or 2) The local tax rate increases (due to school levies, municipal budgets, etc.). Some states cap annual assessment increases — California (2%/year), Texas (10%/year for homesteaded properties). In a strong housing market, assessments can rise significantly between reassessments.
What happens if I don't pay property taxes?
Unpaid property taxes accrue penalties and interest (typically 1–2% per month). After 1–3 years of non-payment (varies by state), the government can place a tax lien on your property. Eventually, the property can be sold at a tax lien sale or tax deed sale to recover the unpaid taxes. This is one of the few debts that can result in losing your home, even if your mortgage is current.