How Much Does Property Tax Cost?

Property tax is the most overlooked line item in homeownership — and one of the biggest. This guide explains how it's calculated, what's typical, and how to estimate your bill before you buy.

Last updated: May 20, 2026Reviewed by CalcGrowth Editorial Team

Quick answer

The average U.S. property tax rate is about 1.1% of home value per year, but it ranges from 0.3% (Hawaii) to over 2.2% (New Jersey, Illinois). On a $400,000 home, expect $1,200–$8,800/year depending on state.

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.

Worked example

On a $400,000 home in a 1.5% tax county, you'd pay about $6,000/year, or $500/month, into escrow. Combined with $2,400 P&I, your real monthly housing cost is closer to $3,000.

How to estimate before you buy

Look up the property's most recent tax bill on the county assessor's website — it's public information.
Cross-check it against the sale price; assessments lag, so a freshly sold home may get reassessed next year.
Multiply purchase price × local effective tax rate for a worst-case estimate.
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.

Property tax cost by home price (U.S. average 1.10%)

Quick reference table at the U.S. effective average. Multiply the monthly figure by your local-vs-average ratio to estimate your own bill.

$200,000 home → $2,200/year ($183/month)
$300,000 home → $3,300/year ($275/month)
$400,000 home → $4,400/year ($367/month)
$500,000 home → $5,500/year ($458/month)
$600,000 home → $6,600/year ($550/month)
$750,000 home → $8,250/year ($688/month)
$1,000,000 home → $11,000/year ($917/month)

In a 2.2% state (New Jersey, Illinois), double those numbers. In a 0.4% state (Alabama, Hawaii), divide by ~2.7.

Full 50-state effective property tax rates (2025)

Effective rate = total property taxes paid ÷ median home value. Use these to estimate before you buy:

Hawaii: 0.29% — lowest in U.S.
Alabama: 0.40%
Colorado: 0.51%
Louisiana: 0.55%
South Carolina: 0.56%
Delaware: 0.58%
West Virginia: 0.59%
Nevada: 0.60%
Utah: 0.63%
Arkansas: 0.64%
Arizona: 0.66%
Idaho: 0.69%
Tennessee: 0.71%
California: 0.71% (Prop 13 capped)
Wyoming: 0.71%
New Mexico: 0.80%
Mississippi: 0.81%
Virginia: 0.82%
North Carolina: 0.84%
Montana: 0.84%
Florida: 0.86%
Indiana: 0.87%
Kentucky: 0.88%
Oklahoma: 0.90%
Georgia: 0.93%
Oregon: 0.97%
Missouri: 0.97%
North Dakota: 0.98%
Washington: 1.00%
Maryland: 1.07%
Minnesota: 1.11%
Alaska: 1.18%
Massachusetts: 1.20%
South Dakota: 1.24%
Maine: 1.36%
Kansas: 1.41%
Michigan: 1.45%
Ohio: 1.59%
Iowa: 1.57%
Pennsylvania: 1.58%
Rhode Island: 1.63%
New York: 1.73%
Nebraska: 1.73%
Texas: 1.74% — highest with no state income tax
Wisconsin: 1.85%
Vermont: 1.90%
Connecticut: 1.79%
New Hampshire: 1.93%
Illinois: 2.08%
New Jersey: 2.23% — highest in U.S.

High-tax county hot spots to know

State averages hide huge intra-state variation. Some counties are 2× the state rate:

Westchester County, NY: median ~$10,000/year
Bergen County, NJ: median ~$11,000/year
Lake County, IL: median ~$8,000/year
Fort Bend County, TX: ~2.4% effective rate
Travis County, TX (Austin): ~1.8% effective
Nassau County, NY: median ~$11,500/year

Always pull the actual tax bill for the specific address from the county assessor — not the state average — before making an offer.

Worked example: same price, three different states

A $400,000 home with a $320,000 mortgage at 6.5% (P&I = $2,023/month):

Hawaii (0.29%): tax $97/mo → total housing ~$2,245/mo
Florida (0.86%): tax $287/mo → total housing ~$2,435/mo
U.S. average (1.10%): tax $367/mo → total housing ~$2,515/mo
Texas (1.74%): tax $580/mo → total housing ~$2,728/mo
Illinois (2.08%): tax $693/mo → total housing ~$2,841/mo
New Jersey (2.23%): tax $743/mo → total housing ~$2,891/mo

Affordability impact

Buying the same $400K home in New Jersey vs Hawaii costs an extra $646/month — roughly the payment on a $100,000 mortgage. Property tax effectively changes how much house you can afford.

Escrow vs paying property tax yourself

Lenders typically require an escrow account if your down payment is below 20%. Above 20% you can usually opt out and pay the county directly twice a year.

Escrow pros

Forced budgeting — no surprise $5,000 bill
Lender handles deadlines and late fees
Required for most government-backed loans

Pay-direct pros

Earn interest on the money in your HYSA until it's due
No escrow analysis shortages bumping your payment mid-year
More control if your assessment is appealed

How to appeal your property tax assessment

Roughly 30–60% of assessments are too high, but only ~5% of owners appeal. Success rate when you do appeal: 40–60%. The process:

Pull your assessment notice and confirm the assessed value (often shown as 'true value' or 'market value').
Find 3–5 comparable recent sales within 0.5 miles, similar size, similar age, lower sale price than your assessment.
Photograph any condition issues (foundation, roof, outdated kitchen) that hurt market value.
File a formal appeal with your county assessor by the deadline (usually 30–60 days after the notice).
Most disputes settle at an informal review; if denied, escalate to the county board of equalization.

Real ROI

A successful appeal that lowers your assessment 10% on a $5,000 bill saves $500/year — and locks in lower future bills since most jurisdictions re-base from the new value.

Property tax exemptions to ask about

Most states grant exemptions worth $300–$3,000 per year that you must apply for — they aren't automatic:

Homestead exemption (primary residence — almost every state)
Senior / over-65 exemption (income-tested in most states)
Disabled veteran exemption (often a full waiver in TX, FL, IL)
Disability exemption
Agricultural / open-space use exemption
Energy-efficient improvement exemptions (solar, storm hardening)

Common property tax mistakes

Using the seller's old tax bill as your forecast — most homes are reassessed at the sale price.
Forgetting that taxes rise every year — budget at least 3% annual growth.
Not filing the homestead exemption in the first year (you can lose a full year of savings).
Assuming the lender's escrow estimate is accurate — confirm with the county yourself.
Buying right at your DTI ceiling in a high-tax state; one reassessment can push you over budget.

Use the calculator

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Frequently Asked Questions

What's the average property tax in the U.S.?

About 1.1% of home value per year. On a $400,000 home, that's roughly $4,400/year or $367/month.

Which state has the highest property tax?

New Jersey leads at about 2.23% effective rate, followed by Illinois (2.08%) and New Hampshire (1.93%).

Which state has the lowest property tax?

Hawaii (~0.29%), Alabama (~0.40%), and Colorado (~0.51%) are typically the lowest.

Can property tax go up?

Yes, almost every year. Local mill rates rise modestly, and reassessments after a sale can jump significantly if the previous owner had owned the home for a long time.

Is property tax deductible?

Yes, but capped at $10,000 per year combined with state income taxes under the current SALT cap (subject to change after 2025).

How is property tax calculated?

Assessed Value × Local Tax Rate (also called the mill rate). On a $400K assessment at a 1.5% rate, the bill is $6,000/year. Assessed value is usually 80–100% of market value depending on the state.

Will my property tax go up after I buy?

Almost always, yes. Most counties reassess at or near the new sale price. If you paid more than the prior assessment, expect your first bill to jump within 12 months.

Can I appeal my property tax bill?

Yes. About 40–60% of appeals succeed when the owner provides 3–5 lower comparable sales. The deadline is usually 30–60 days after you receive your assessment notice.

What's the difference between assessed value and market value?

Market value is what the home would sell for today. Assessed value is what the county uses to calculate tax — often 80–100% of market in most states, but as low as 10% in some jurisdictions that apply higher rates against the lower base.

Do I have to use escrow for property taxes?

If your loan-to-value is above 80%, almost always yes. Once you cross 20% equity (or your loan is paid off), you can usually opt out and pay the county directly.

Does property tax stop when the mortgage is paid off?

No. Property tax is permanent — you owe it as long as you own the home. Many retirees underestimate this; on a $500K home in a 1.5% county, that's still $625/month forever.

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