Open a property tax notice and you may find a value far below what your home would sell for. Or, after a hot year, one that feels too high. Both can be correct. The value used for tax is set by state rules that often do not match the market on purpose. Knowing which rules your state uses tells you whether your notice is a problem or just how the system works.
Three different numbers
Market value is the assessor’s estimate of what your home would sell for on a set date, usually January 1. Counties estimate it from recent sales, construction costs and the features on record for your property. Depending on the state, it may be called fair market value, appraised value, full cash value or just value.
Assessed value is the value the tax is based on before exemptions. States get there in one of three ways, described below.
Taxable value is the assessed value minus exemptions such as a homestead or senior exemption. Your rate is applied to this number.
Way 1: assessed value equals market value
Many states assess homes at 100% of market value, including Texas, Florida, Washington, Virginia and Massachusetts. In these states, the assessed value on your notice should be close to a realistic sale price as of the valuation date. If it is far off, you have the basis for an appeal.
Even here, the value you are taxed on may be lower than market value because of a cap. More on that below.
Way 2: a fixed share of market value
Other states tax only a set fraction of market value, called the assessment ratio. A few examples for homes:
- Ohio: 35% of market value
- Georgia: 40%
- Connecticut: 70%
- Illinois: 33.33% in most counties, 10% for homes in Cook County
- Alabama and Mississippi: 10% for an owner-occupied home
- South Carolina: 4% for a primary residence, 6% for other property
A low ratio does not mean low taxes. The tax rate is set higher to make up for it. A 1% rate on full value raises exactly the same tax as a 10% rate on a value assessed at 10%. The ratio matters most when it differs by property type. In South Carolina, a second home is assessed at half again the rate of a primary residence, so living in the home saves real money.
Way 3: a cap on yearly growth
Several states limit how fast the taxed value can rise while you own the home, no matter what the market does:
- California (Proposition 13): taxable value can rise at most 2% a year and resets to the purchase price when the home sells. See our Prop 13 guide.
- Florida (Save Our Homes): homesteaded homes rise at most 3% a year or the rate of inflation, whichever is lower.
- Texas: a homestead’s appraised value for tax can rise at most 10% a year.
- Michigan: taxable value can rise by inflation or 5%, whichever is lower, until the home sells.
- Oregon: assessed value generally rises 3% a year, separate from market value.
Under a cap, the gap between market and taxable value grows the longer you stay. That is why two identical houses on the same street can have very different bills. The newer owner’s value reset at purchase. It is also why buyers should never assume they will inherit the seller’s tax bill. Our home buying guide covers that trap.
How often values are updated
States reappraise on very different schedules. Some counties revalue every year using sales data. Ohio does a full reappraisal every six years with an update at the three-year mark. Some places go a decade or more between reappraisals, which can mean a big jump when one finally happens. Pennsylvania has no statewide schedule, and some of its counties still use values from decades ago.
What this means for your bill
- If your state assesses at full value with no cap, a rising market raises your taxed value directly. Rates may or may not come down to make up for it.
- If your state uses a ratio, check that the ratio was applied correctly, then judge the market value the assessor started from.
- If your state caps growth, your taxed value may rise every year even when prices fall, until it catches up with market value.
In every system, the number you can challenge is the market value estimate. The ratio and the caps are set by law. To see how your county’s typical bill compares with home values there, look up its effective rate on our county pages. Our guide to effective rates and mill rates shows how to turn your own notice into the same kind of number.
Figures from the US Census Bureau American Community Survey, 2020-2024. How we calculate them.
