Property taxes are set locally, based on your home’s assessed value and your area’s tax rate, and paid once or twice a year, usually through your monthly mortgage payment. Effective rates range from under 0.5% of a home’s value a year in parts of Hawaii, Alabama and Louisiana to more than 2% in parts of New Jersey, Illinois and Texas, so they can change your monthly cost by hundreds of dollars.
How your bill is calculated
Your local assessor estimates your home’s value (the assessed value). Some states tax a fixed share of that value. Then the combined rate from your county, town, school district and other local bodies is applied. The result, minus any exemptions you qualify for, is your bill.
Because assessment rules differ so much, the most useful comparison is the effective tax rate: the yearly tax divided by the home’s market value.
Try it: Property tax estimatorEstimate the yearly and monthly tax for a home by ZIP code or town, using local effective rates.How much difference location makes
On a $400,000 home, a 0.6% effective rate is $2,400 a year ($200 a month). At 2.2% it’s $8,800 a year ($733 a month). That $533 a month difference reduces how much house the same income can buy by roughly $80,000.
See rates for every state and county, with maps, or jump to the lowest and highest property tax counties. In New Jersey, rates vary so much between neighboring towns that we show them town by town.
What changes when you buy
The seller’s current tax bill isn’t always what you’ll pay. In many places, a sale triggers a reassessment at the purchase price, so the bill can jump.
- California: Proposition 13 resets the assessed value to your purchase price; the base rate is 1% plus local charges, typically about 1.1% to 1.25% in total.
- Florida: the seller’s homestead cap doesn’t transfer to you, so your bill is often much higher than theirs.
- Many other states reassess on a schedule, so the bill may rise at the next reassessment.
Always estimate the tax on your purchase price, not the seller’s bill. The true cost to buy tool uses the local rate on your price.
How taxes are paid
Most lenders collect property taxes monthly as part of your payment and hold them in an escrow account, then pay the bill when it’s due. At closing you’ll fund a cushion in that account and may reimburse the seller for taxes they prepaid. Both show up in your cash to close.
Ways to lower your bill
- Homestead exemptions: most states reduce the taxable value of your primary residence. You usually have to apply.
- Senior, veteran and disability exemptions are common.
- Appeal your assessment if it’s higher than your home’s market value; check your value with the home value estimator.
Factor taxes into where you buy
If two towns are otherwise similar, the lower-tax one may let you afford more house. Filter by tax rate in the town finder, or compare towns with the moving cost comparison.
Common questions
Will my property tax be the same as the seller’s?
Not necessarily. Many places reassess at the sale price, and some caps (like Florida’s homestead cap) don’t transfer, so estimate the tax on your purchase price.
Are property taxes included in my mortgage payment?
Usually. Most lenders collect them monthly in an escrow account and pay the bill when it’s due.
How do I lower my property tax?
Apply for any homestead or other exemptions you qualify for, and appeal your assessment if it’s higher than your home’s market value.
Updated October 2026. Educational content. OfferBacked is not currently a lender and doesn’t issue pre-approvals or loans.