What It Means
Property tax is a tax charged by your local government, such as your county, city or school district, on real estate you own. The bill is based on the assessed value your local assessor puts on the property, multiplied by the tax rate set where you live. Both the assessed value and the rate are local, so two similar homes a few miles apart can have very different bills.
Try It: Work Out Your Property Tax Bill
Example numbers to start. Put in the assessed value and rate from your own tax bill or assessment notice.
If your mortgage has escrow, the tax part of each payment would rise by about a month.
The bill holds steady or falls at the same rate.
How It Sounds at Home
- "Our property taxes went up after the reassessment."
- "Taxes are paid out of escrow, so the payment jumped."
- "The second half of the tax bill is due in the spring."
The Breakdown
Worked example. A home assessed at $300,000 in an area whose example rate is 1.4%:
| Step | Amount |
|---|---|
| Assessed value | $300,000 |
| × tax rate of 1.4% | $4,200 a year |
| ÷ 12 months | $350 a month |
| Next year's assessed value of $330,000, same rate | $4,620 a year |
| Rise per month | $35 |
What the result means. When the assessed value or the rate goes up, so does the bill. If you pay through an escrow accountEscrowOn a mortgage, an account your servicer keeps to pay your property taxes and homeowners insurance, funded by part of each monthly payment. See more, your servicer raises the monthly escrow amount after its yearly review; the escrow page explains that analysis and the cushion of up to two months a servicer may hold. Without escrow, the bill comes to you directly, often in installments, so set the money aside ahead of each due date.
What moves the number. A new assessment, a change in the local rate, or a change in any exemption you qualify for. Your assessment notice and tax bill show each piece, and your local assessor's office explains how valuesPersonal valuesThe principles and qualities a person holds most important, such as honesty, family or creativity, which guide their choices and how they judge events. See more are set and how to appeal one.
Good to Know
For 2025, the IRS's Schedule A instructions limit the combined deduction for state and local income, sales and property taxes to $40,000, or $20,000 if married filing separately. The limit shrinks when modified adjusted gross incomeGross incomeThe full amount you earn before taxes and other deductions come out. For federal taxes, it's all income you receive unless a law exempts it. See more is over $500,000 ($250,000 married filing separately), though never below $1010,000 stepsA popular daily step goal that began as the name of a 1960s Japanese pedometer; later studies find health benefits begin well below it. See more,000 ($5,000). You only get it if you itemize. IRS Publication 530 adds that charges on the tax bill for services, such as trash pickup or water by the gallon, don't count as deductibleInsurance deductibleThe part of a covered loss you pay yourself before your home, renters or auto insurance pays the rest, set as a dollar amount or a percentage. See more real estate tax. The limits change by year, so check the current Schedule A instructions or ask a tax professional before you file.
FAQ
How is property tax calculated?
Your local assessor sets an assessed value, and the local tax rate is applied to it. At an example rate of 1.4%, a $300,000 assessment gives a $4,200 yearly bill.
Can I deduct property taxes on my federal return?
If you itemize on Schedule A. For 2025, the IRS limits the combined state and local tax deduction to $40,000 ($20,000 married filing separately), reduced for modified adjusted gross income over $500,000, but not below $10,000.
Why did my mortgage payment go up when my rate is fixed?
Often because the property tax bill rose. If your taxes are paid through escrow, the servicer raises the monthly escrow amount to cover the higher bill.
Do It in Buhata
Bills (Plus), Reminders
With Plus, add each property tax installment to Bills with its due date, and set a Reminder for the month your assessment notice usually arrives.
Open BuhataRelated Terms and Categories
- Escrow
On a mortgage, an account your servicer keeps to pay your property taxes and homeowners insurance, funded by part of each monthly payment.
- Mortgage
A loan used to buy or refinance a home, secured by the home itself and repaid in monthly installments over a set term.
- HOA fees
Regular dues a homeowners or condo association charges owners to run and maintain the community, paid on top of the mortgage, taxes and insurance.
- Itemized deduction
A specific expense the IRS lets you subtract on Schedule A, such as mortgage interest, state and local taxes, charity or large medical bills, instead of the standard deduction.
- Standard deduction
A fixed dollar amount the IRS lets you subtract from income before tax, set by filing status and adjusted yearly; for 2026 it's $16,100 single and $32,200 joint.
- Sinking fund
Money set aside in small, regular amounts for a known future cost, so the bill doesn't land on a single paycheck.
Sources
IRS, "Instructions for Schedule A (Form 1040) (2025)"; IRS, Publication 530 (2025), "Tax Information for Homeowners"; IRS, "Topic no. 503, Deductible taxes"
Last updated .