How are property taxes calculated?

Property tax = assessed value × local tax rate (mill rate). For example, a home assessed at $300,000 with a 1.5% rate pays $4,500/year. Assessed value may differ from market value—some states assess at a percentage of market value. Tax rates are set by local governments, school districts, and special districts.

Which states have the highest and lowest property taxes?

The highest property tax states are New Jersey (2.23%), Illinois (2.07%), Connecticut (2.00%), and New Hampshire (1.86%). The lowest are Hawaii (0.29%), Alabama (0.39%), Colorado (0.51%), and Louisiana (0.51%). However, states with lower property taxes may have higher income or sales taxes.

How do I appeal my property tax assessment?

First, review your property card for errors (wrong square footage, extra bathroom, etc.). Then compare recent sales of similar homes. If your assessed value is higher than comparable properties, file an appeal with your county assessor's office within the deadline (usually 30-90 days after assessment notice). Success rates for appeals range from 30-60%.

Property Tax Calculator: Rates by State and How to Lower Your Bill (2026)

Property taxes are one of the largest ongoing costs of homeownership, averaging over $3,500 per year nationally. Rates vary dramatically—from under 0.3% in Hawaii to over 2.2% in New Jersey—making location a major factor in your total housing cost.

Property Tax Rates by State

All 50 States Ranked (2026 Estimates)

Rank	State	Effective Tax Rate	Tax on $300,000 Home	Tax on $500,000 Home
1	New Jersey	2.23%	$6,690	$11,150
2	Illinois	2.07%	$6,210	$10,350
3	Connecticut	2.00%	$6,000	$10,000
4	New Hampshire	1.86%	$5,580	$9,300
5	Vermont	1.83%	$5,490	$9,150
6	Wisconsin	1.73%	$5,190	$8,650
7	Texas	1.68%	$5,040	$8,400
8	Nebraska	1.63%	$4,890	$8,150
9	New York	1.62%	$4,860	$8,100
10	Rhode Island	1.53%	$4,590	$7,650
11	Pennsylvania	1.49%	$4,470	$7,450
12	Ohio	1.47%	$4,410	$7,350
13	Iowa	1.43%	$4,290	$7,150
14	Michigan	1.38%	$4,140	$6,900
15	Kansas	1.37%	$4,110	$6,850
16	Maine	1.30%	$3,900	$6,500
17	South Dakota	1.22%	$3,660	$6,100
18	Minnesota	1.11%	$3,330	$5,550
19	Massachusetts	1.10%	$3,300	$5,500
20	Alaska	1.07%	$3,210	$5,350
21-25	Median states	0.90-1.05%	$2,700-$3,150	$4,500-$5,250
26-35	Below average	0.70-0.89%	$2,100-$2,670	$3,500-$4,450
36-45	Low-tax states	0.50-0.69%	$1,500-$2,070	$2,500-$3,450
46	Louisiana	0.51%	$1,530	$2,550
47	Colorado	0.51%	$1,530	$2,550
48	Alabama	0.39%	$1,170	$1,950
49	West Virginia	0.36%	$1,080	$1,800
50	Hawaii	0.29%	$870	$1,450

National average: ~1.07% effective rate ($3,498/year on median home).

How Property Tax Is Calculated

The Formula

Component	Description	Example
Market value	What your home would sell for	$400,000
Assessment ratio	Percentage used for taxation (varies by state)	80%
Assessed value	Market value × assessment ratio	$320,000
Exemptions	Homestead, senior, veteran, etc.	-$50,000
Taxable value	Assessed value minus exemptions	$270,000
Mill rate / tax rate	Set by local taxing authorities	25 mills (2.5%)
Annual property tax	Taxable value × rate	$6,750

Who Sets the Rate

Taxing Authority	Typical Share of Tax Bill
School district	40-60%
County government	15-25%
City/municipality	15-25%
Special districts (fire, library, parks)	5-15%

Property Tax Exemptions

Common Homestead Exemptions

State	Homestead Exemption	Savings on $300,000 Home
Florida	$50,000 off assessed value	~$650/year
Texas	$100,000 off (school taxes)	~$1,300/year
California	$7,000 off assessed value	~$77/year
Georgia	$2,000 off assessed value (county)	~$60-100/year
Louisiana	$75,000 off assessed value	~$750/year
Illinois	$10,000 off EAV	~$250/year

Other Common Exemptions

Exemption Type	Who Qualifies	Typical Savings
Senior citizen	Age 62-65+ (varies by state)	$500-$5,000/year or assessed value freeze
Veteran/disabled veteran	Veterans with service-connected disability	$1,000-$100% exemption
Disability	Permanently disabled homeowners	$500-$5,000/year
Agricultural	Working farmland	Significant (taxed at farm use value)
Solar energy	Homes with solar panels	Solar value excluded from assessment

How to Appeal Your Property Tax

Step-by-Step Appeal Process

Step	Action	Timeline
1	Review your assessment notice	Within 1 week of receiving
2	Check your property card for factual errors	Week 1
3	Research comparable property sales and assessments	Weeks 1-2
4	Gather evidence (photos, independent appraisal, comps)	Weeks 2-3
5	File formal appeal by deadline	Usually 30-90 days after notice
6	Attend hearing (informal or formal)	As scheduled
7	Receive decision / pursue further appeal if needed	2-6 months total

Common Grounds for Appeal

Issue	Example	Evidence Needed
Factual error	3 bedrooms listed as 4	Property card, building permit records
Over-assessment vs comps	Your $300K home assessed at $350K while similar homes are $290K	3-5 comparable sales within 1 year and 1 mile
Condition issues	Major structural problem not reflected	Photos, contractor estimate, inspection report
Market decline	Values dropped since last assessment	MLS data showing declining sales
Unequal assessment	Similar homes in your area assessed lower	Assessor records for comparable properties

Appeal Success Rates

Method	Average Success Rate	Average Reduction
Informal review (assessor’s office)	30-40%	5-10%
Formal appeal (board of review)	40-50%	10-15%
Professional tax appeal firm	50-70%	10-20%
Independent appraisal submitted	40-60%	Varies

Property Tax and Mortgage

How Property Tax Affects Your Monthly Payment

Home Price	Property Tax Rate	Annual Tax	Monthly Escrow	Added to Monthly Mortgage
$250,000	0.5% (low)	$1,250	$104	+$104
$250,000	1.0% (average)	$2,500	$208	+$208
$250,000	2.0% (high)	$5,000	$417	+$417
$400,000	0.5% (low)	$2,000	$167	+$167
$400,000	1.0% (average)	$4,000	$333	+$333
$400,000	2.0% (high)	$8,000	$667	+$667

Lifetime Property Tax Cost

Home Value	Tax Rate	Annual Tax	Over 30 Years (No Increases)	Over 30 Years (3% Annual Increase)
$300,000	1.0%	$3,000	$90,000	$142,700
$300,000	1.5%	$4,500	$135,000	$214,100
$300,000	2.0%	$6,000	$180,000	$285,400
$500,000	1.0%	$5,000	$150,000	$237,900
$500,000	2.0%	$10,000	$300,000	$475,700

Tax Deduction for Property Taxes

Filing Status	SALT Deduction Cap	Includes
Single	$10,000	Property tax + state/local income tax (or sales tax)
Married Filing Jointly	$10,000	Same combined cap
Married Filing Separately	$5,000	Same categories, lower cap

Is Itemizing Worth It for Property Tax?

Scenario	Property Tax	State Income Tax	Mortgage Interest	Total Itemized	Standard Deduction (MFJ)	Should Itemize?
A	$3,000	$4,000	$12,000	$19,000	$30,000	No
B	$6,000	$5,000	$18,000	$29,000	$30,000	Borderline no
C	$8,000	$7,000	$22,000	$37,000*	$30,000	Yes**

*SALT capped at $10,000, so actual deduction = $10,000 + $22,000 = $32,000. **Saves $2,000 × marginal rate.

Ways to Lower Your Property Tax

Strategy	Potential Savings	Effort Level
Apply for homestead exemption	$100-$1,500/year	Low (one-time application)
Appeal your assessment	5-20% reduction	Medium (annual process)
Check for senior/veteran exemptions	$500-$5,000+/year	Low
Avoid over-improving (relative to neighborhood)	Prevents increase	Low
Review for assessment errors	Depends on error	Low
Time renovations strategically	Delays reassessment	Low
Consider lower-tax locations when buying	Thousands per year	High (moving)