Property tax is the single largest recurring cost of homeownership after the mortgage itself. Unlike income tax or sales tax, property tax is levied by thousands of local jurisdictions — counties, cities, school districts, and special assessment districts — each with its own rules.

The Basic Formula

At its core, property tax is simple:

Property Tax = Assessed Value × Millage Rate

But every word in that formula hides complexity.

Assessed Value vs. Market Value

The market value is what a willing buyer would pay. The assessed value is what the local assessor determines for tax purposes. In some states they are the same. In others they diverge wildly.

  • California: Assessed value can only increase 2% per year (Prop 13) until the property is sold — so long-time owners may pay tax on a fraction of market value.
  • Texas: Assessed value roughly tracks market value, but homeowners can claim a homestead exemption of up to $100,000.
  • Georgia: Assessed value is typically 40% of market value.
  • South Carolina: Owner-occupied homes are assessed at 4% of market value; investment properties at 6%.

The Millage Rate

The millage rate (or "mill rate") is expressed in mills — one mill = $1 per $1,000 of assessed value. A millage rate of 25 mills, for example, equals 2.5% of assessed value.

Millage rates are set annually by each taxing authority. A single property tax bill may combine:

  • County general fund
  • City or municipal fund
  • School district
  • Fire district
  • Library district
  • Community college district
  • Special assessments (sidewalks, sewer, etc.)

A typical homeowner in a suburban county might pay a combined rate of 20-35 mills (2.0-3.5%).

The Effective Tax Rate

Because assessed values and millage rates vary so widely, the best way to compare property tax burden across jurisdictions is the effective tax rate:

Effective Rate = Median Property Tax Paid ÷ Median Home Value × 100

This is the metric we use on {{ site_name }}. It answers the question: "For a typical home in this county, what percentage of its value is paid in annual property tax?"

Why Rates Vary So Much

Effective property tax rates in the U.S. range from under 0.30% (Hawaii, Alabama) to over 2.20% (New Jersey, Illinois). The main drivers:

  • State reliance on property tax vs. income/sales tax: States with no income tax (Texas, Florida, Nevada) tend to have higher property taxes.
  • Local government structure: Fragmented jurisdictions with many overlapping districts tend to have higher combined rates.
  • Assessment frequency and caps: States with strict assessment caps (California, Oregon) tend to have lower effective rates.
  • Homestead exemptions: Generous exemptions (Florida, Texas) reduce effective rates for owner-occupants.

How to Check Your Own Rate

Use our property tax calculator to estimate your annual bill based on your home value and county. For the exact figure, check your most recent property tax bill or contact your county assessor.

The Bottom Line

Property tax is a local tax with local rules. The same $500,000 home can carry a $1,500 annual tax bill in one county and $12,500 in another just a few miles away. Understanding the effective rate — not just the millage — is essential for budgeting and relocation decisions.