What is a mill rate for property taxes?

A mill rate (or millage rate) is the tax rate expressed in mills per dollar of assessed value, where 1 mill = $0.001 (one tenth of a cent), or equivalently $1 per $1,000 of assessed value. A mill rate of 15 means you pay $15 for every $1,000 of taxable assessed value, or a 1.5% effective rate. Mill rates are set annually by local governments (city/county) and school districts, and your total rate is often the sum of multiple taxing authorities.

What is an assessment ratio?

The assessment ratio is the percentage of a property's market value that the local assessor uses as the basis for taxation. If a home is worth $400,000 and the assessment ratio is 70%, the assessed value is $280,000. This is sometimes called the "assessment level" or "equalization rate." Full-value assessment (100%) is the standard in many states including California, New York, and Texas. Other states like Illinois use lower ratios (around 33% in Cook County).

What is a homestead exemption?

A homestead exemption reduces the taxable assessed value of a primary residence, lowering the property tax bill. Most states offer some form of homestead exemption for owner-occupied homes. Common amounts: Texas ($40,000), Florida (up to $50,000), Georgia ($2,000), California (up to $300,000 under Proposition 19). Some exemptions are in addition to other exemptions for seniors, veterans, or disabled homeowners. You must typically file for the exemption — it is not applied automatically.

How is property tax calculated?

Property tax = Taxable Assessed Value × (Mill Rate / 1,000). Taxable assessed value is found by multiplying your assessed value by the assessment ratio, then subtracting any exemptions. For example: $300,000 assessed value × 80% assessment ratio = $240,000, minus $25,000 homestead exemption = $215,000 taxable value. At 20 mills, the annual tax is $215,000 × 0.020 = $4,300.

Are property taxes included in my mortgage payment?

If you have a conventional mortgage, your lender typically requires an escrow account that collects 1/12 of your estimated annual property tax with each monthly payment. The lender then pays the tax bill on your behalf when it comes due. This is why your total monthly housing payment (PITI: principal, interest, taxes, insurance) is higher than the principal and interest calculation alone. FHA loans always require escrow; conventional loans may waive it if your LTV is below 80%.

Can I appeal my property tax assessment?

Yes. If you believe your assessed value is too high relative to market value, you can file an appeal (also called an "abatement" or "assessment review") with your local assessor or an appeals board. The appeal process varies by jurisdiction but typically requires evidence of market value — comparable sales, a recent appraisal, or evidence of errors in the property record. Many homeowners successfully reduce their assessments, especially after home prices decline or if the assessor overstated square footage or features.

How do property taxes vary by state?

Property taxes vary enormously by state and even by county within a state. The lowest effective property tax states include Hawaii (0.28%), Alabama (0.37%), and Colorado (0.51%). The highest include New Jersey (2.23%), Illinois (1.97%), and Texas (1.68%). Note that Texas has no state income tax, so property taxes fund more government services — making direct state-to-state comparisons complex. The national average effective property tax rate is approximately 1.1% of market value.

Property Tax Calculator

The Property Tax Calculator estimates your annual property tax bill based on assessed value, local mill rate, assessment ratio, and homestead exemption. Property tax is one of the largest recurring costs of homeownership, averaging $2,800 per year nationally but varying from under $500 to over $20,000 depending on location and home value. Enter your local parameters to calculate exactly what you will owe.

Assessed Value

From your property tax bill or assessor's website

Mill Rate

mills

1 mill = $1 per $1,000 assessed value

Assessment Ratio

Some localities assess at 80% of market value

Homestead Exemption

Primary residence exemption (e.g. $25,000 in Florida)

Market Value (optional)

If entered, shows assessed value as % of market

Annual Property Tax

$4,500.00

Monthly Tax (Escrow)

$375.00

Effective Tax Rate

1.500%

Taxable Assessed Value

$300,000.00

How to use this calculator

1
Enter the assessed value
The value assigned to your property by the local tax assessor — often different from market value. Find it on your property tax bill or your county assessor's website.
2
Enter the mill rate
Your local mill rate (also called millage rate) is set by your municipality and school district. 1 mill = $1 per $1,000 of assessed value. Find it on your tax bill or municipal website. Typical range is 5–30 mills.
3
Enter the assessment ratio
Some localities assess at less than 100% of market value. If your municipality assesses at 80% of market value, enter 80 here. Many areas use 100%. This is the "uniform assessment rate" for your jurisdiction.
4
Enter any homestead exemption
A homestead exemption reduces the taxable assessed value for primary residences. Many states offer exemptions of $10,000–$50,000. Florida offers up to $50,000; Texas offers $40,000. Enter 0 if none.
5
Review annual and monthly tax
The calculator shows your annual property tax, monthly amount (for budgeting and mortgage escrow), effective tax rate on your assessed value, and taxable assessed value after exemptions.

Formula

Taxable Assessed Value = Assessed Value × (Assessment Ratio / 100) − Homestead Exemption
Annual Property Tax = Taxable Assessed Value × (Mill Rate / 1,000)
Monthly Property Tax = Annual Property Tax / 12
Effective Tax Rate (%) = Annual Property Tax / Assessed Value × 100

The mill rate converts easily: a 15-mill rate means $15 tax per $1,000 of taxable assessed value, or 1.5%. The assessment ratio converts the assessed value to the taxable base used in your jurisdiction. The homestead exemption is then subtracted from the taxable base. Example: assessed value $250,000, assessment ratio 80%, homestead exemption $25,000, mill rate 18. Taxable value = $250,000 × 0.80 − $25,000 = $175,000. Annual tax = $175,000 × (18/1,000) = $3,150. Monthly = $262.50. Effective rate = $3,150 / $250,000 × 100 = 1.26%.

Worked Example

Assessed Value: $300,000 Assessment Ratio: 80% (county assesses at 80% of market) Homestead Exemption: $25,000 (state primary residence exemption) Mill Rate: 20 mills Taxable Assessed Value: $300,000 × 0.80 − $25,000 = $215,000 Annual Property Tax: $215,000 × (20 / 1,000) = $4,300 Monthly Property Tax: $4,300 / 12 = $358.33 Effective Tax Rate: $4,300 / $300,000 × 100 = 1.43% This $4,300 annual tax would be included in your monthly mortgage escrow payment by your lender.

Frequently Asked Questions

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