Quick overview
State property tax rules set how local governments (counties, cities, school districts) determine the assessed value of a home and apply tax rates. These taxes fund local services such as schools, police, and roads. Rules vary widely by state and locality — from how often properties are revalued to which exemptions apply and whether taxes are escrowed with your mortgage. (See the IRS and Consumer Financial Protection Bureau for federal-facing guidance.)
How state property taxes typically work
- Assessor determines a property’s taxable value based on market value, a formula, or historic purchase price. Assessment frequency varies (annual, biennial, or at change of ownership).
- A tax rate (often expressed as a millage rate) is applied to the assessed value to calculate the tax bill.
- Local governments set rates separately for county, city, and school levies, so your total effective tax rate is the sum of those levies.
- Exemptions and credits (homestead, veteran, senior, low-income) reduce the taxable value or the bill itself.
- Taxes are billed by local tax collectors; failure to pay can lead to penalties, interest, liens, and eventually a tax sale in some states.
Authoritative sources: IRS (federal tax treatment and deductions) and the Consumer Financial Protection Bureau (practical homeowner guidance) are good starting points for national-level questions. See IRS (https://www.irs.gov/) and CFPB (https://www.consumerfinance.gov/).
What to check before and at closing (practical checklist)
- Ask the seller for the most recent property tax bill and any recent assessment notices. That bill shows current taxes and any special assessments.
- Confirm whether your mortgage lender will escrow property taxes and insurance. If taxes aren’t escrowed, you’ll be responsible for paying the tax bill directly.
- Check whether taxes are prorated at closing. Most closings charge the seller for the portion of the year they owned the home and the buyer for the remainder.
- Research local assessment schedules and millage rates on the county assessor’s website. If you need help finding your local office, search the county name + “assessor.”
- Estimate your effective tax rate (tax bill ÷ purchase price = effective tax rate) to compare properties across jurisdictions.
In my practice advising homeowners, I’ve seen buyers surprised by high local levies (school bonds or special district assessments). Always pull the full tax bill rather than relying on a single number from a listing.
Common exemptions and credits to look for
- Homestead exemption: Reduces taxable value for owner-occupied primary residences in many states. (Example: Florida and many other states offer homestead protections.)
- Senior, veteran, and disability exemptions: Many states provide special relief based on age, service, or disability.
- Assessment caps: Some states (California’s Prop 13 is a prominent example) limit annual increases in assessed value until ownership changes.
- Income-based deferrals: Some states let eligible homeowners defer taxes until sale or death.
To research common relief programs in your area, use your county assessor’s website or review local tax office materials. Also see our pages on [Property Tax Assessment](