How Much Does Property Tax Cost?

How property tax is calculated

The basic formula is simple: Property Tax = Assessed Value × Tax Rate. Each year the local government assesses your home's value (usually close to market value), then applies the local mill rate. A 1% rate on a $400,000 assessment = $4,000/year, or about $333/month.

Typical state rates

Effective property tax rates vary dramatically by state. Approximate averages:

• Hawaii: 0.29%
• Alabama: 0.40%
• Colorado: 0.51%
• Florida: 0.86%
• California: 0.71% (capped by Prop 13)
• U.S. average: ~1.10%
• Texas: 1.74%
• Illinois: 2.08%
• New Jersey: 2.23%

States with no income tax (Texas, Florida) often have higher property tax to make up for it.

What property tax actually pays for

• Public K–12 schools (typically the largest chunk)
• Police, fire, and emergency services
• Roads, parks, and libraries
• Local government operations

How it shows up in your mortgage payment

Most lenders collect 1/12 of your annual property tax bill each month and hold it in an escrow account, then pay the county on your behalf. That's why your 'mortgage payment' is bigger than just principal and interest.

How to estimate before you buy

1. Look up the property's most recent tax bill on the county assessor's website — it's public information.
2. Cross-check it against the sale price; assessments lag, so a freshly sold home may get reassessed next year.
3. Multiply purchase price × local effective tax rate for a worst-case estimate.
4. Add it to your mortgage P&I to see your true monthly payment.

Why property tax goes up

• Your local government raises the mill rate (usually 1–3%/year)
• Your home is reassessed higher after a sale or renovation
• School bonds or special assessments pass on your ballot

Unlike your mortgage P&I, property tax typically rises every year — it's the part of your housing cost that isn't truly fixed.

Use the calculator