What is this calculator for?
You're under contract on a $475,000 house in suburban Atlanta. The listing showed a $3,200 annual property tax estimate. Your lender just sent the loan estimate and the property tax line says $5,860. Both numbers are plausible depending on which year's assessment was used, whether the previous owner had a homestead exemption, and how the seller's agent rounded. Property tax is one of the largest line items on a US homeowner's budget, and it's also one of the most opaquely calculated.
Property tax in the US is administered by counties, with rates that vary dramatically: Hawaii averages 0.28% of home value; Alabama 0.39%; New Jersey 2.49%; Illinois 2.05%; New Hampshire 2.18%. On a $475,000 house, the same dwelling generates an annual tax bill of $1,330 in Hawaii versus $11,827 in New Jersey. Over a 30-year mortgage, that's a $315,000 difference — comparable to the down payment on the house itself.
This calculator takes your home's market value and your state's effective tax rate and produces an estimated annual property tax bill plus monthly escrow contribution. It's most useful when comparing two cities, evaluating a relocation, or sanity-checking what your lender's loan estimate says. For an exact figure, your county tax assessor's website is authoritative — they show the assessment, exemptions, and millage rates that produce your actual bill.
How to use this calculator
Enter your home value as the current market value. For a purchase, use your contracted price (or the appraised value if it came in lower). For an existing home, use a recent comparable-sales estimate from Redfin or your county's recent reassessment. Some counties tax based on "assessed value" rather than market value — assessed values are typically a fraction of market (e.g., California taxes 1% of assessed value, which is roughly purchase price plus capped annual increases). The calculator uses market value as a starting point; states with assessment ratios apply them internally.
Pick your state. Property tax rates vary by an order of magnitude across states. The calculator uses each state's effective average rate (total property tax collected divided by total home value) from the most recent year of state-level Census of Governments data. Within a state, rates also vary by county — California averages 0.74% but Marin County is 1.0%+, urban LA closer to 0.65%; Texas averages 1.6% but Harris County (Houston) can hit 2.5% in some districts. For sub-state accuracy, check your county assessor's millage rate directly.
The homestead exemption (where applicable) reduces taxable value for owner-occupants. Florida's homestead exemption shields the first $50,000 of assessed value. Texas exempts $100,000. New Jersey doesn't have a general homestead exemption. The exemption is automatic if you live in the home and file the homestead paperwork at closing; investors and second-home owners typically don't qualify. The calculator can approximate the typical exemption for owner-occupants in your state, but the exact savings depend on your county's local exemption rules.
Understanding your results
The calculator returns annual property tax, monthly escrow contribution (annual tax / 12), and effective tax rate (annual tax / home value × 100). The breakdown shows the calculation: assessed value × millage rate (or assessed value × rate) − exemptions = tax.
How to read it. The monthly escrow figure is what gets added to your principal + interest mortgage payment. If your P&I is $2,837 on a $475,000 mortgage, and property tax adds $488/month escrow, your total PITI rises to $3,325. Plus homeowner's insurance ($90-200/month), plus PMI if applicable, plus HOA. The full monthly carrying cost of a $475K house in a high-property-tax state is often 30-40% more than just the principal + interest payment.
State context: in Texas, New Hampshire, Illinois, New Jersey, and Vermont (top 5 highest), property tax is the dominant non-mortgage homeownership cost — often 1.5-2.5x the homeowner's insurance bill. In Hawaii, Alabama, Louisiana, Delaware, and South Carolina (bottom 5), property tax is a rounding error on a typical monthly payment. The presence of state income tax tends to inversely correlate with property tax: Texas has zero state income tax but property tax averages 1.6%; Vermont has 6% state income tax AND 1.83% property tax (worst-of-both, partly offset by other factors).
The escalation question is critical for retirement planning. Many states cap annual property tax increases for owner-occupants (California's Prop 13 caps at 2%/year; Florida's Save Our Homes caps at 3%/year). In states without caps, property tax often increases 5-8% per year as home values appreciate. A 65-year-old in a paid-off Texas house can see property tax double over 15 years of retirement even with no other lifestyle change — pushing some elderly homeowners out of homes they own free and clear. This is one reason senior-specific property tax exemptions exist in most states (typically kicking in at 65 with income limits).
A worked example
Marcus and Tara are comparing three possible relocation cities. Marcus's job can move anywhere with a comparable salary; Tara is starting a remote consulting practice. They're targeting a $525,000 home in each city, with similar size and amenities.
Option A: Austin, Texas. Travis County effective property tax: 1.85%. Annual: $9,712. Monthly escrow: $809. They'd qualify for the standard Texas homestead exemption ($100K reduction in taxable value), bringing it to roughly $7,862 annually / $655 monthly. Texas state income tax: 0%.
Option B: Raleigh, North Carolina. Wake County effective rate: 0.86%. Annual: $4,515. Monthly escrow: $376. NC has a flat 4.5% state income tax — meaningful but mid-tier. On their combined $185,000 household income, NC state income tax: about $7,200/year.
Option C: Nashville, Tennessee. Davidson County effective rate: 0.66%. Annual: $3,465. Monthly escrow: $289. Tennessee has no state income tax (interest/dividend tax phased out 2021).
Net annual housing tax cost (property + state income tax on $185K household income): Austin $7,862 (no state income tax). Raleigh $4,515 + $7,200 = $11,715. Nashville $3,465 + $0 = $3,465. Nashville wins by a wide margin on tax alone; Austin's high property tax fully offsets the no-income-tax advantage; Raleigh is the worst-of-both for their specific income level.
One more consideration: 15 years of compounding. Austin's property tax grows roughly with home appreciation. If their $525K home appreciates 3.5%/year for 15 years, it's worth $876K. Property tax at 1.85% becomes $16,206/year — even with the homestead cap (Texas caps at 10%/year for primary residence), they'd be paying $13,000+ annually by year 15. Nashville at 0.66% on an $876K appreciated home: $5,782/year. The compounding gap over 15 years widens the geographic decision; Nashville saves another $90,000+ over the decade-and-a-half.
State-by-state variations
The five highest property tax states (effective rates): New Jersey 2.49%, Illinois 2.05%, New Hampshire 2.18%, Connecticut 2.00%, Vermont 1.83%. The five lowest: Hawaii 0.28%, Alabama 0.39%, Louisiana 0.51%, Wyoming 0.55%, Colorado 0.51%. The 9x rate difference between Hawaii and New Jersey on the same home value is the largest interstate financial variable in US homeownership.
California's Proposition 13 (1978) caps annual property tax increases for an owner-occupant at 2% of prior year's assessed value, plus 1% of purchase price as the base rate. This creates massive intra-state disparities: a 1985 buyer might pay $1,500/year on a $1.2M home; the family who bought next door in 2024 pays $14,000/year on a similar home. When the long-time owner sells, the new owner's property tax often quadruples from the listing's quoted number. Always look up the most recent assessment, not the seller's tax bill, when buying in California.
Texas has aggressive property tax with no state income tax. The 10% annual homestead cap on assessed value means primary residences can't see assessment jumps faster than 10%/year (regardless of market appreciation), but the cap resets when a home is sold — new owners face full market assessment. Texas also has a robust senior property tax freeze (age 65+ school district tax frozen, county/city sometimes frozen too) that keeps long-tenure elderly homeowners in homes.
Florida's "Save Our Homes" cap limits annual property tax increases to 3% or CPI (whichever is lower) for homestead properties. The cap is portable — when you sell and buy another Florida home, you can transfer up to $500K of accumulated cap to the new property. Florida also has a $50,000 standard homestead exemption (and an additional $50K for low-income seniors). The combined effect: long-tenure Florida homeowners often pay dramatically less than recent buyers, similar to California's Prop 13 dynamic.
New Jersey's high rates fund local schools — most NJ property tax goes to municipal and school district budgets rather than the state. This creates "good school district premium" effects where a $700K NJ home in a top-rated district might have a $20K annual tax bill versus the same home a town over with a weaker district paying $11K. Property tax is effectively a private school tuition substitute in NJ; the price-to-rent calculus often favors renting in high-tax NJ districts unless you specifically want the schools and plan to stay 10+ years.
Related resources
For evaluating whether your overall housing cost makes financial sense, see Buy vs Rent and Mortgage Calculator. For the loan side of housing, the Loan Amortization Calculator. For state-move scenarios where property tax is one variable, Cost of Living Comparison. For income-tax-side state comparisons, the Income Tax Calculator. The Tax Foundation's state property tax report publishes current effective rates by state; your county tax assessor's website is the authoritative source for your specific property.