How the bill is actually computed
Local governments set property tax in two steps: the assessed value (the assessor's estimate of your home's worth, sometimes multiplied by an assessment ratio — many states assess at a fraction of market value) and the millage rate (dollars of tax per $1,000 of assessed value, stacked across county, city, school district and special districts). Because ratios and millages vary wildly, the only portable comparison number is the effective rate: annual tax ÷ market value. That's what this calculator uses — the state presets are median effective rates, and the custom field accepts your county's exact figure (your last tax bill ÷ a realistic market value gives it to you in one division).
Why identical houses owe wildly different taxes
- State and locality dominate. New Jersey's median effective rate (~2.2%) is more than seven times Hawaii's (~0.29%). Within states, school-district lines can move the bill 50% across a street.
- Caps and ratchets: California's Prop 13 caps assessment growth at 2%/year until sale — long-time owners pay a fraction of their new neighbor's bill on an identical house. Florida, Texas, Michigan and others cap annual increases for primary residences (10%, 3%, inflation). The cap resets at purchase: budget on the post-sale reassessment, not the seller's current bill — the #1 new-buyer surprise in capped states.
- Homestead exemptions knock a chunk off assessed value for primary residences — Texas $100,000 (school portion), Florida up to $50,000, many states $25,000-plus, with bigger cuts for seniors, veterans and disabled owners. They usually require a one-time application; forgetting it donates hundreds a year.
- Low sticker, high tax (and vice versa) changes affordability rankings: Texas has no income tax but ~1.7% property tax — a $400,000 Austin house carries a $560/month tax line. California's 0.7% effective rate softens its price shock slightly. Total cost of ownership is the only honest comparison.
Escrow: why your "fixed" mortgage payment rises
Most lenders collect property tax monthly into an escrow account and pay the county for you — so the tax lives inside your mortgage payment. When the levy or assessment rises, the servicer recalculates: your "fixed-rate" payment climbs, sometimes with a catch-up for last year's shortfall stacked on top. A 30-year fixed mortgage fixes principal and interest only; the tax-and-insurance layer floats forever. This is also the part of the payment that survives the mortgage — a paid-off $400,000 house at 1.5% still costs $500/month to hold, which matters enormously for retirement cash-flow planning.
Appealing your assessment (worth more than it sounds)
Assessments are mass-produced estimates, and error rates are material — studies routinely find 30-60% of appeals win some reduction. The process: check the assessor's record for factual errors (square footage, bedroom count, lot size), pull 3-5 recent comparable sales below your assessed value, and file within the appeal window (often 30-60 days after the notice). No lawyer needed at typical home values; the hearing is usually informal. A successful 10% cut on a $9,000 bill saves $900 every year until the next reassessment. If your notice jumped after a hot market cooled, the odds are especially good.
The deduction fine print
Property tax is deductible federally only within the SALT cap — state and local taxes (income + property combined) capped at $10,000 per return for most filers, and only if you itemize past the standard deduction. Practical upshot: in high-tax states the cap is often exhausted by income tax alone, making property tax effectively non-deductible; run your actual bracket in the tax bracket calculator before crediting the deduction in a buy-vs-rent decision (the calculator lets you toggle it).