How Property Taxes Work (Assessed Value & Mill Rate)

Property tax funds local services like schools and roads, and it is charged every year for as long as you own the home. The bill comes from two things: what the local assessor says your home is worth, and the rate your jurisdiction applies to that value.

Assessed value is not market value

Assessors set an assessed value that may be a fraction of the market price, using an assessment ratio that varies by area. Many places also cap how fast that value can rise each year, so a long-time owner can owe far less than a new buyer next door with an identical house.

The mill rate

The tax rate is often quoted in mills — one mill is $1 of tax per $1,000 of assessed value. A home assessed at $250,000 in an area with a 20-mill rate owes $5,000 a year. Expressed as an effective rate, US property taxes average a bit over 1% of value, but they range widely by state and even by town.

Exemptions and appeals

• Homestead and senior exemptions can shave a chunk off the taxable value for a primary residence.
• Most owners pay the bill monthly into a mortgage escrow account rather than in a lump sum.
• If the assessment looks too high versus comparable sales, you can usually appeal it and lower the bill.

Estimate your bill by state and see how it fits into your monthly payment with the calculators below.