Property Taxes

Quick Takeaways

Property tax is calculated by the local government and is based on the real estate of each individual, though some jurisdictions tax tangible personal property, like a boat, as well.
Property taxes are than used by the municipality to fund sewer, water, and road repairs, maintain parks, fund schools, libraries, and other institutions.
Not paying your property taxes can result in a lien against your property.

Source: Property Taxes (Investopedia, Apr. 13, 2022)

Property taxes are a large part of homeownership in the United States. Depending on which state and/or city you live in, your property tax rate will vary. Your property tax is based on an assessment of the value of your home, and the money from these taxes funds municipal entities like schools, libraries, public safety, roads, sewers, water, and more.

The value of your home is dependent on many things, all of which are taken into consideration when determining your property taxes. Whether your town is adding a new school, fire station, or redoing a road or you have added a finished attic to your home, your property taxes will reflect the value added to your residence.

Some homeowners feel that their property taxes are too high, meaning that their house is not actually worth as much as it was assessed for. In this historic housing market, home values have skyrocketed, but we have yet to see the same level of increase from property taxes. If you feel your property taxes are unfair, there are official channels to challenge them.

What Are Property Taxes?

Property tax is generally considered a regressive tax, given that it is based on monetary values of land, improvements to land, personal property or intangible property rather than income levels.

While all state-level U.S. jurisdictions have some form of real property (land and structure) taxation, far fewer impose taxes on intangible personal property (such as stocks, bonds, patents, and copyrights) and tangible personal property (like boats, cars, and business equipment). Residential and commercial real estate are most often a source of local tax revenue, while personal property taxes are often a source of state tax revenue.

How Are Property Taxes Used?

Revenue from property taxes can be used to fund local government services for community safety such as law enforcement and fire departments or funding education through school districts or libraries.

How Do You Calculate Property Tax?

Property taxes are based primarily on a home’s value, and state officials and local governments make the final determination of the property tax rate imposed on residential homeowners.

Property tax rates vary across and within states due to differences in statutory tax rates and the different methods utilized by local governments to compute their real property tax base.

Typically, the taxing jurisdiction assesses the real property value by approximating the amount the property would sell for in a prospective transaction. On the other hand, some jurisdictions based the real property value on acquisition value of the property or the on last sale price. Still other jurisdictions assess the income the property could generate.

In addition, some jurisdictions may impose a different statutory tax rate for residential and business property.

Lastly, while local governmental entitiespdf levy most property taxes, some states may also levy (or are permitted to levy) a statewide property tax, which can be in addition to the local property tax.

See References for more information.

Property Taxes Topics

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References

NAR Library & Archives has already done the research for you. References (formerly Field Guides) offer links to articles, eBooks, websites, statistics, and more to provide a comprehensive overview of perspectives. EBSCO articles (E) are available only to NAR members and require a password.

Property Tax Basics and Issues

Consumer Guide: State and Local Tax (SALT) Deductions (National Association of REALTORS®, Dec. 4, 2025)

Homeownership has always had its perks when it comes to tax deductions, but the latest tax reform helps homeowners save even more money. Here’s why.

Talking to Buyers About Property Tax Deductions (National Association of REALTORS®, Sep. 18, 2025)

The property tax deduction can reduce a buyer's state and local income tax liability by deducting some or all of their property taxes.

House Passes Tax Reform Package with Key Wins for Real Estate (National Association of REALTORS®, May 22, 2025)

The bill retains the current tax rates while including a range of NAR-supported provisions, including quadrupling the SALT deduction.

Property Tax: Calculator & How Property Tax Works (NerdWallet, Mar. 24, 2026)

“Failing to pay your property taxes can result in the taxing authority placing a tax lien on the property. A tax lien is a legal claim against property or financial assets you own or may have coming to you. It’s not a seizure of your assets, but it is a claim on them. If you sell the asset, the government could be entitled to some or all of the proceeds.”

The Assessment Gap: Racial Inequalities in Property Taxation (The Quarterly Journal of Economics, 137(3), 2022) E

“We document a nationwide “assessment gap” that leads local governments to place a disproportionate fiscal burden on racial and ethnic minorities. We show that holding taxing jurisdictions and property tax rates fixed, Black and Hispanic residents face a 10%–13% higher tax burden for the same bundle of public services.”

Instructions for Schedule A (Form 1040) Itemized Deductionspdf (Internal Revenue Service)

This form from the United States Internal Revenue Service provides detailed instructions so you can properly deduct your property taxes from your annual taxes. The form is updated annually.

Consumer Guide: Property Taxes (National Association of REALTORS®)

“Whenever you buy a home in the United States, property taxes are a reality of homeownership. An agent who is a REALTOR® can help connect you with a tax expert in your area, but use this consumer guide to understand the basics.”

Property Taxes: What Everybody Needs to Know (Lincoln Institute of Land Policy, Sep. 2021)

“The property tax is the largest single source of revenue under the control of state or local governments in the United States. Property taxes provide a fundamental fiscal foundation for all types of local governments, but structural characteristics that make the property tax different from other types of taxes can lead to confusion and misunderstanding. Additionally, the gap between public and political perceptions of property taxes, and the views of tax analysts, can be especially wide. Therefore, improved education and understanding of property taxation is especially valuable for policy makers, homeowners and renters, business owners and operators, community leaders, those involved in adjudicating issues about the tax (lawyers and judges), students, and others. This paper helps to inform the public about the property tax by examining its importance to local governments, how the property tax impacts homeowners, and how property tax burdens are distributed.”

Property Taxes Impact on Property Value

Property Taxes Have Been Rising. Here’s What It Means for Housing (HousingWire, Nov. 7, 2023)

“An increase in property tax has more of a direct impact on the monthly mortgage bill, Chamberlin noted. A $1,000 increase in the property tax, for example, will increase the monthly payment on a mortgage by $83 whereas a $1,000 increase in the home price only adds about $7 to the monthly bill assuming interest rates of around 7% on a 30-year fixed loan. “

Where Do People Pay the Most in Property Taxes? (Tax Foundation, Sep. 12, 2023)

Features an interactive chart with Median Property Taxes Paid by County, 2021 (5-year estimate).

Property Taxes by State and County, 2026 (Tax Foundation, Mar. 16, 2026)

Use the tools, maps, and data from the Tax Foundation to explore at the county and state level where property taxes are the highest or lowest in the United States.

When Property Values Rise, Do Property Taxes Rise Too? (Lincoln Institute of Land Policy, Feb. 2025)

“This policy download examines the relationship between changes in property values and property taxes. When housing prices increase rapidly, as they have done recently in the US, homeowners are often concerned that property taxes will increase as well. But the relationship between property values and property taxes is more nuanced than that. It varies widely across states, depending on the kind of property tax institutions in the state, especially the design of property tax limits, and the actions local officials take in response to changes in housing prices. In some states, changes in assessed values have almost no impact on property tax bills, while in other states increases in assessed values lead to a nearly one-to-one increase in property taxes.”

Neighborhood Institutions and Residential Home Sales: Evaluating the Impact of Property Tax Exemptions (Journal of Real Estate Finance & Economics, Feb. 2022)

“By far, the most extensively studied tax-exempt nonprofit property type is religious institutions. Do et al. ([18]) found a negative influence of churches on surrounding home prices up to 850 ft away. In a direct rebuttal to Do et al. ([18]), Carroll et al. ([14]) found a positive relationship between proximity to a church and home prices; specifically, prices decrease at a decreasing rate as the distance from a church increases.”

Property Tax Rates and House Prices: The Impact of Relatively High and Low Property Tax Rates (Journal of Property Tax Assessment and Administration, 2020) E

“We investigated three property tax issues and summarize our research. First, what is the impact of property taxes on home values, given that the literature is inconsistent on this effect? Second, do higher property tax rates constrain house price appreciation? Third, how are lower property tax rates tied to the household tenure? Our conclusions suggest that some local governments actually collect less tax revenue as a result of excessive effective tax rates.”

Challenging Your Property Tax Bill

Appealing Your Property Tax Assessment: When, Why and How To (Bankrate, Oct. 6, 2022)

“Another way to determine if the value deemed by your county is fair is by examining other homes that were built in the same year and have similar square footage and improvements, along with other factors. You can include this information (perhaps with additional documentation, such as photos) with your appeal to help make your case.”

Eight Key Steps When Challenging A Property Tax Assessment (Forbes, Dec. 1, 2020)

The following eight steps will help you successfully challenge your property tax assessment: do you due diligence when choosing an attorney and comparing local taxes, get a market analysis, take pictures of your property, contact your REALTOR or broker, schedule an appeal, contact the assessor’s office, have backup data at the ready, and compare data on local homes.

Appealing Your Property Taxes May Secure 'Several Years of Savings'” (CNBC, May 16, 2025)

“Over 40% of homeowners across the U.S. could potentially save $100 or more per year by protesting their assessment value, Realtor.com estimates, with median savings of $539 a year. “You’re banking on several years of savings,” said Pete Sepp, president of the National Taxpayers Union Foundation.

That’s because while some state or local governments mandate annual property tax reassessments, others set less frequent cycles with gaps of several years — and some have no set schedule at all. There are also some events that can trigger a reassessment, like a home sale or renovations.”

Useful Websites

Property Tax (Tax Foundation)

Quarterly Summary of State & Local Tax Revenue (QTAX) (U. S. Census Bureau)

Significant Features of the Property Tax (Lincoln Institute of Land Policy)

eBooks & Other Resources

eBooks.realtor.org

The following eBooks and digital audiobooks are available to NAR members:

How to Invest in Real Estate & Pay Little or No Taxes Use Tax Smart Loopholes to Boost Your Profits By 40% (eBook)

Books, Videos, Research Reports & More

As a member benefit, the following resources and more are available for loan through the NAR Library. Items will be mailed directly to you or made available for pickup at the REALTOR® Building in Chicago.

Property Taxes in Illinois—What is the Effect of Rapid Increases and Large Drops in House Prices on Property Taxes?pdf (University of Illinois, 2011) [PDF link]

Challenging the Conventional Wisdom of the Property Tax (Cambridge: MA: Lincoln Institute of Land Policy, 2010) HJ 4120 B14

The Worst Tax? A History of the Property Tax in America (Lawrence, KS: University of Kansas Press, 1996) HJ 4120 F57

How to Reduce Your Property Taxes (Miami, FL: Genesis Press, 1995) HJ 3241 Ad5

Reduce Your Property Taxes (Los Altos, CA: Crisp Publications, 1992) HJ 4120 T97

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