Complete guide
Reviewed July 2026Property tax is the yearly bill your local government charges for owning real estate, and it funds the services closest to home: public schools, police and fire, roads and libraries. Unlike a flat fee, it scales with what your property is worth — which is why two identical homes in different counties can carry wildly different bills.
The calculation looks intimidating because it hides behind jargon: assessed value, assessment ratio, mill rate, levies and exemptions. In reality it is a short chain of multiplications. Your home's market value is converted into an assessed (taxable) value, that value is multiplied by a local tax rate expressed in mills, and any exemptions you qualify for are subtracted before the final bill is set.
This calculator turns your assessed value and local rate into an annual and monthly figure, so you can budget escrow accurately and spot an over-assessment worth appealing. Below we break down every step, show a full worked example, and cover the exemptions and appeals that can meaningfully lower what you pay.
How property tax is calculated
There are usually three moving parts: the assessed value (a portion of market value), the mill rate (tax per $1,000 of assessed value), and exemptions that reduce the taxable base. One mill equals one-thousandth of a dollar — $1 of tax for every $1,000 of assessed value.
The formula
Assessed value = Market value × Assessment ratio Taxable value = Assessed value − Exemptions Annual tax = Taxable value × (Mill rate ÷ 1,000) Effective rate = Annual tax ÷ Market value (useful for comparing areas)
The mill rate is set by every taxing body that overlaps your parcel — county, city, school district, and sometimes special districts for fire or water. Their rates are added together into one combined levy, which is why your bill funds several authorities at once.
Worked example
- Market value $400,000; local assessment ratio 60%, so assessed value = 400,000 × 0.60 = $240,000.
- You qualify for a $25,000 homestead exemption: taxable value = 240,000 − 25,000 = $215,000.
- Combined mill rate = 25 mills (county 8 + city 5 + schools 12).
- Annual tax = 215,000 × 25 ÷ 1,000 = $5,375 (about $448/month in escrow).
- Effective rate = 5,375 ÷ 400,000 = 1.34% of market value — handy for comparing to other towns.
What raises or lowers your bill
- Assessment ratio: many states tax only a fraction of market value; a lower ratio means a lower bill for the same home.
- Mill rate: set annually by each authority; a school-bond vote or budget shortfall can push it up.
- Exemptions: homestead (owner-occupied), senior, veteran, disability and agricultural exemptions each cut the taxable base.
- Special assessments: one-off levies for sidewalks, sewers or street lighting are added on top of the regular tax.
- Reassessment: when your county revalues property, a jump in market value can raise your bill even if the mill rate is unchanged.
Common exemptions worth claiming
Exemptions are rarely automatic — you usually have to apply once with your assessor's office, and some must be renewed. A single missed homestead filing can cost hundreds of dollars a year.
| Exemption | Who qualifies | Typical effect |
|---|---|---|
| Homestead | Owner-occupied primary residence | Fixed reduction in taxable value |
| Senior / over-65 | Older homeowners, income limits may apply | Reduction or assessment freeze |
| Veteran / disability | Qualifying veterans or disabled owners | Partial to full exemption |
| Agricultural | Working farmland | Valued on use, not market price |
Appealing an over-assessment & using this tool
Because valuation is partly subjective — assessors weigh comparable sales, condition and improvements differently — assessments are sometimes too high. If recent sales of similar nearby homes are below your assessed value, you likely have grounds to appeal.
- Read your assessment notice carefully and confirm the assessed value and any exemptions applied.
- Gather evidence: three to five recent comparable sales below your assessment, or a fresh appraisal.
- File the appeal before your county's deadline — miss it and you wait a full year.
- For this calculator, enter your assessed value (from the notice) and your combined mill rate.
- Subtract exemptions you qualify for to see the realistic taxable value and final bill.
Frequently asked questions
Glossary
- Market value
- The price a property would likely sell for on the open market.
- Assessed value
- The taxable value of a property, typically market value multiplied by the assessment ratio.
- Assessment ratio
- The percentage of market value that is subject to tax in a given jurisdiction.
- Mill rate
- Tax charged per $1,000 of assessed value; one mill equals $0.001.
- Levy
- The total tax imposed by a taxing authority, and the combined rate applied to your property.
- Homestead exemption
- A reduction in taxable value for an owner-occupied primary residence.
- Effective rate
- Annual property tax as a percentage of market value, used to compare areas.
- Reassessment
- A periodic revaluation of property that can change assessed value and the tax bill.
Key takeaways
Property tax = taxable value × mill rate ÷ 1,000, where taxable value is market value × assessment ratio minus exemptions.
Compare places by effective rate (tax ÷ market value), not the headline mill rate.
Claim every exemption you qualify for and appeal an inflated assessment — both lower the taxable base and your bill.
Enter your assessed value and combined mill rate above to see your annual and monthly property tax, then subtract exemptions to find your true bill.