How property tax is calculated
The assessed value, assessment ratio and millage (mill rate) that turn a home value into an annual bill, and why two homes worth the same can be taxed differently.
Updated Oct 24, 2026
The basic formula
A property-tax bill is, in most places, assessed value × tax rate, where the tax rate is the sum of the rates set by every overlapping authority — county, city or township, school district, and sometimes special districts for fire, water or libraries.
The rate is often quoted in mills. One mill is one dollar of tax per $1,000 of taxable value, i.e. 0.001. A combined 25 mills on a $60,000 taxable value is $1,500 a year.
Assessed value is not always market value
Many jurisdictions tax only a fraction of market value — the assessment ratio. A 40% ratio on a $300,000 home gives a $120,000 taxable base before any exemption.
Some states cap how fast assessed value can rise each year, so a long-time owner and a recent buyer on the same street can owe very different amounts.
Why our numbers are "effective" rates
Because statutory rates, ratios, caps and exemptions differ so much, this site reports an effective rate: the median real estate taxes actually paid divided by the median home value for the area. It answers "what share of a home's value do owners here typically pay each year?" rather than listing every local millage.
Use it to compare places and to sanity-check a bill — not as the exact rate that will appear on your statement.