Property Tax

Applying Your Local Tax Rate to Assessed Value

Property tax is calculated by applying your local tax rate to your home’s assessed value — not directly to its market value. Enter your home’s market value, the assessment ratio your local taxing authority uses, and the effective tax rate, and this calculator estimates your annual (and monthly) property tax bill.

In many places, assessed value simply equals market value (a 100% assessment ratio). In others, the local government assesses homes at only a fraction of market value — which is exactly what the Assessment Ratio field accounts for, so the calculation still works correctly either way.

The Formula

$$\text{Annual Property Tax} = \vA{\text{Market Value}} \times \vB{\text{Assessment Ratio}} \times \vC{\text{Tax Rate}}$$

The commonly-cited national average effective property tax rate (based on U.S. Census Bureau data) is about 0.9% — a useful starting point, not a substitute for checking your own county assessor’s actual rate, since real rates vary enormously by state and county.

Worked Example

A $400,000 home, with a 100% assessment ratio and a 0.9% effective tax rate:

1. Assessed value: $400,000 \times 1.00 = 400,000$.
2. Annual property tax: $400,000 \times 0.009 = \$3,600$ (about $300.00/month).

Key Factors to Consider

• Property tax rates and assessment practices are set locally, so two nearby homes can be taxed very differently. Rates and assessment ratios are determined by state, county, and even individual local taxing districts (like school districts) — there’s no single “correct” rate to assume, which is exactly why this calculator treats both the assessment ratio and tax rate as fully user-editable inputs rather than fixed defaults.
• Many jurisdictions offer exemptions that reduce the taxable assessed value for eligible homeowners. A homestead exemption (for a primary residence), or exemptions for senior citizens, veterans, or disabled homeowners, can meaningfully lower an actual property tax bill below what a straightforward market-value calculation would suggest — checking a local assessor’s office for available exemptions is worth doing before treating this estimate as final.
• Assessed values are typically reassessed periodically, not continuously updated with the real estate market. Many jurisdictions reassess homes on a multi-year cycle (or trigger a reassessment specifically at sale) rather than instantly — a home’s assessed value can lag meaningfully behind its current market value for a period of time between reassessments.
• Property tax is usually collected as part of a mortgage escrow payment, not paid as one lump annual bill directly by most homeowners. See the Mortgage Calculator’s own PITI breakdown for how property tax fits into a typical monthly housing payment alongside principal, interest, and insurance.

Common Mistakes

• Applying the tax rate directly to market value everywhere. Some jurisdictions do exactly that (a 100% assessment ratio), but others assess at a fraction of market value — always confirm your own local convention rather than assuming.
• Treating the national average rate as your own rate. Property tax rates vary by a factor of 8 or more between the highest- and lowest-taxed states — this default is a starting point for exploring the calculator, not a stand-in for your actual bill.
• Confusing a “mill rate” with a plain percentage. Many local governments quote rates in mills (dollars per $1,000 of assessed value) rather than percent — see the FAQ for the quick conversion.

Useful to Know

• Working out a full monthly housing payment that includes this tax? Mortgage Calculator breaks down the full PITI payment (principal, interest, taxes, and insurance).
• Not sure how much home you can afford once property tax is factored in? Mortgage Affordability Calculator estimates an affordable price range from your income and debts.
• Need to know what it would cost to rebuild the home itself, separate from its land value? Home Replacement Cost Calculator estimates rebuilding cost for insurance purposes.