How are property taxes calculated?

Property tax = assessed home value × local tax rate. Assessors determine your home's value (usually 80-90% of market value), then the local government applies its mill rate (tax per $1,000 of value). For example, a $300,000 home with 1.2% tax rate pays $3,600 annually ($300/month). Rates vary dramatically by location: 0.3% in Hawaii to 2.5% in New Jersey.

Can I lower my property taxes?

Yes, through: 1) Appealing your assessment if it's higher than comparable homes, 2) Applying for homestead exemptions (available in most states for primary residences), 3) Senior, veteran, or disability exemptions if eligible, 4) Making home improvements that don't dramatically increase value. Check your assessment annually for errors—overassessments are common.

Why did my property taxes increase?

Property taxes increase when: 1) Your assessed value increases (due to home improvements or market appreciation), 2) Local tax rates increase (to fund schools, services), 3) You lost an exemption, or 4) Initial assessment errors are corrected. In high-appreciation areas, taxes can increase 5-10% annually even without tax rate changes.

Are property taxes deductible?

Yes, you can deduct up to $10,000 in state and local taxes (SALT) including property taxes on federal returns if itemizing deductions. For those in high-tax states or with mortgages under the standard deduction, this provides tax benefits. However, most homeowners now use the standard deduction ($14,600 single, $29,200 married for 2024) rather than itemizing.

What states have the highest and lowest property taxes?

Highest effective rates: New Jersey (2.47%), Illinois (2.23%), New Hampshire (2.18%), Connecticut (2.07%), Vermont (1.86%). Lowest: Hawaii (0.28%), Alabama (0.41%), Louisiana (0.53%), Wyoming (0.58%), South Carolina (0.57%). Consider property taxes when choosing where to live—they significantly impact homeownership costs.