Quick answer
Property tax is not charged on your home's full market value in most places — it is charged on an assessed value, minus exemptions, at the local tax rate. A $500,000 home assessed at 100% of value, with a $50,000 homestead exemption, has a taxable value of $450,000; at a 1.25% rate the annual tax is $5,625, or about $469 a month in escrow. The effective rate on the true value is 1.13%.
How the Property Tax Assessor works, step by step
Enter the market value, the assessment ratio (the percentage of market value your jurisdiction assesses), any exemptions you qualify for, and the tax rate. The calculator applies the ratio, subtracts exemptions and multiplies by the rate — the same sequence your tax bill follows — and shows the monthly escrow figure a lender would collect.
Rates are quoted two ways. A percentage rate applies directly to taxable value. A mill rate is dollars per $1,000 of taxable value — 12.5 mills is the same as 1.25%, and the calculator converts between the two. Total tax is usually the sum of several overlapping levies: county, city, school district (often the largest) and special districts, each with its own rate.
The effective rate — your actual tax divided by the market value — is the figure for comparing locations: in the example it is 1.13%, below the headline 1.25%, because of the exemption. Statewide, effective rates on owner-occupied housing run from about 0.27% in Hawaii to 2.23% in New Jersey in the Tax Foundation's analysis of 2023 Census data — a difference of $9,800 a year on the same $500,000 home.
The assessment ratio is where two identical homes in different states diverge. Some jurisdictions assess at 100% of market value; others assess a fraction — 80%, 70%, or less — and then apply a higher nominal rate to the smaller base. Only the effective rate, tax divided by true value, lets you compare them, which is why the calculator shows the assessed and taxable values separately.
Exemptions are the part of the bill you control. A $50,000 homestead exemption saves $625 a year at a 1.25% rate in the example, and many jurisdictions add larger exemptions for seniors, veterans and disabled homeowners. You normally must apply — the exemption is rarely automatic — and it is one of the most commonly missed savings in property tax.
The formula
Assessed value = Market value × assessment ratio. Taxable value = assessed value − exemptions (floored at zero). Annual tax = taxable value × tax rate (or × mill rate ÷ 1,000). Effective rate = annual tax ÷ market value. Monthly escrow = annual tax ÷ 12.
Worked example — try it on the calculator above
Worked example: $500,000 market value, 100% assessment ratio
Assessed value: $500,000 × 100% = $500,000. Less the $50,000 homestead exemption: taxable value $450,000. At a 1.25% combined rate (12.5 mills): $450,000 × 1.25% = $5,625 a year, which a lender escrows at $468.75 a month. Effective rate on the true value: $5,625 ÷ $500,000 = 1.13%. Remove the exemption and the bill rises by $625 — exemptions are worth filing for. The same home at New Jersey's 2.23% effective rate would cost $11,150 a year; at Hawaii's 0.27%, $1,350.
Frequently Asked Questions
What is a homestead exemption and who gets one?
A reduction in taxable value for your primary residence, offered by most states and many localities. Amounts range from a flat sum to a percentage of value, and some jurisdictions add larger exemptions for seniors, veterans and disabled homeowners. You normally must apply — it is rarely automatic — and it is one of the most commonly missed savings in property tax.
Can I appeal my property tax assessment?
Yes. Assessments can be appealed, usually within a short window after notices are mailed each year. Successful appeals show the assessed value exceeds market value — using comparable recent sales — or that the property record contains errors (wrong square footage, wrong features). Winning reduces the assessed value, and therefore the tax, until the next reassessment cycle.
Why did my tax bill jump after I bought the house?
In many states the assessed value is capped or grows slowly while an owner stays put (California's Proposition 13 caps growth at 2% a year; homestead caps exist in Florida, Texas and elsewhere). A sale resets the value to the purchase price, so the new owner inherits a bill based on current value while the seller paid on a years-old figure. Budget for the reset amount, not the seller's bill.
Is property tax deductible?
For itemisers, state and local taxes including property tax are deductible up to a combined cap of $40,400 for tax year 2026 ($20,200 if married filing separately), phasing down above $505,000 of modified adjusted gross income. Most homeowners take the standard deduction — $16,100 single and $32,200 married filing jointly for 2026 — in which case the property tax produces no federal tax benefit.
Estimates, not advice. This calculator provides educational estimates based on the inputs you enter and the assumptions shown on this page. It is not financial, tax or investment advice, and it cannot see your full situation. Verify important figures against official sources, and consider a qualified professional for decisions about your own money. See our Disclaimer and Methodology.