Last updated: 3 Oct 2025

U.S. Property Tax

A practical overview of U.S. property taxes: who levies them, how assessments work, how rates are set (millage), what caps and exemptions may reduce the bill, how to appeal, and what happens if you pay late. We also cover business & personal property taxes, escrow practices, and a short cross-border note.

What is property tax (and who levies it)?

• Local tax: Property tax is generally imposed by counties, cities, school districts, and special districts, not by the federal government.
• Tax base: Typically the property’s assessed value (AV), which is derived from market value (MV) and may be modified by ratios/caps.
• Use of proceeds: Schools, police/fire, infrastructure, libraries, and other local services.

Assessment: market value, assessed value & equalization

Assessors determine value using sales comparison, cost, and income approaches. Key terms:

Formula: Taxable Value = (Market Value × Assessment Ratio × Equalization) − Exemptions

Rates: mills, levies & caps

• Millage rate: One mill = one-tenth of a cent of tax per dollar of taxable value (i.e., $1 per $1,000). Total rate is the sum of all overlapping levies (county + city + school + special districts).
• Budget-driven: Many localities set rates to fund an approved budget across the aggregate tax base.
• Rate or levy caps: Some states limit annual levy growth or cap assessment/taxable-value increases; many systems reset partially on sale or after major renovations.

Exemptions & relief (homestead, seniors, veterans, circuit breakers)

Real vs. personal property; residential vs. commercial

Appeals: step-by-step

1. Review notice (assessment change or annual roll): check property characteristics, comparables, and math.
2. Informal review with the assessor: correct errors (sq ft, condition, classification).
3. Administrative appeal to the local board/review authority: submit evidence (comps, photos, contractor quotes, income/expense statements).
4. Judicial review (state court or tax tribunal): deadlines and standards vary; consider appraisal support.

Burden of proof: Typically on the property owner to show the assessment is excessive/unequal or not reflective of market value.

Billing, escrow & delinquencies

• Installments & due dates: Many jurisdictions bill semi-annually or annually; due dates are local-law specific.
• Mortgage escrow: Lenders often collect monthly and pay taxes on your behalf; verify escrow analyses yearly.
• Late payment: Penalties/interest accrue; persistent delinquency can trigger tax liens, tax-lien sales, or tax deed foreclosure processes.
• Refunds/credits: Successful appeals can yield refunds or credits to the following bill.

Cross-border note (non-U.S. owners)

• Owning U.S. real estate as a non-resident typically subjects you to local property tax on the same basis as residents.
• Property tax is distinct from U.S. income tax on rents/gains and from potential estate tax exposure—structure and titling matter.
• Consider entity/estate planning trade-offs (privacy, financing, liability, transfer taxes, and selling costs).

Document checklist

FAQ

Is property tax federal?

No. Property tax is set and collected locally by counties, cities, school and special districts.

Why did my bill jump after I bought?

Many jurisdictions “reset” assessed/taxable value at change of ownership or after major improvements, overriding prior caps.

What is a millage rate?

One mill equals $1 tax per $1,000 of taxable value. Your total rate is the sum of all overlapping levies.

Do all states tax business equipment?

No. Rules vary widely—some tax business personal property (with thresholds/exemptions), others don’t.

Can I deduct property tax on my U.S. federal income tax return?

Often yes for individuals (as an itemized deduction), but subject to federal limits and SALT caps—confirm with current rules.

Talk to us

We review assessments, build appeal files, quantify savings from exemptions/caps, and coordinate multi-state portfolios for individuals and businesses.