Your annual property tax bill isn't set by any one government. It's the sum of taxes levied by a handful of separate local entities — your school district, your county, your city, and often one or more special districts (fire, water, hospital, community college) — each of which independently adopts a rate every year. The bill you receive is just those amounts added together.
The math behind the bill comes in four steps that every US state follows in some form, even when the terminology varies. Once you know the steps, you can read any tax bill in any state.
Step 1: Your property gets valued
The county assessor (sometimes called the appraiser or appraisal district) assigns your property a value once a year, and that value becomes the base on which tax is calculated. This is the number people usually mean when they say "my appraised value" or "my assessed value" — though as we'll see, those terms can mean different things in different states.
The assessor's value is supposed to approximate what your home would sell for on the open market. In practice, mass appraisal relies on comparable sales, property characteristics, and statistical modeling — so the assessor's number is often within 5–15% of actual market value rather than a precise match. The looser the appraisal, the larger the opportunity to appeal it down (more on that in the assessment appeals guide).
Some states (notably Florida and Arizona) use two different valuation numbers: a market value or full cash value that reflects actual current worth, and a capped or limited value that can't grow more than a few percent per year once homestead is established. When you hear about Florida's "Save Our Homes" or Arizona's "Proposition 117," those are the mechanisms that create this second, lower valuation.
Step 2: An assessment ratio may apply
Some states tax your property on 100% of the assessed value; others tax you on a fixed percentage of it. This percentage is called the assessment ratio.
- Texas and Florida tax at 100% of the relevant value — no ratio applied.
- Tennessee taxes residential property at a flat 25% assessment ratio. A $400,000 home has an assessed value of $100,000 for tax purposes.
- Arizona uses a 10% ratio for owner-occupied primary residences (Class 3 property). A $400,000 home has an assessed value of $40,000.
- Illinois uses 33⅓% statewide — except in Cook County, where residential property uses 10%, and then the state applies an "equalization factor" to bring Cook up to parity with the rest of the state.
- Indiana taxes at 100% of assessed value (no ratio), but the assessed value itself is often below market.
The assessment ratio is why Arizona's nominal tax rates look much higher than Florida's even when the effective rates are similar. When you compare nominal rates across states, you're comparing apples to oranges unless you factor in the ratio.
Step 3: Exemptions reduce your taxable base
Almost every state offers some kind of homestead exemption that reduces the taxable value of your primary residence. The mechanics vary:
- Florida subtracts $25,000 + $25,000 from the assessed value of a homesteaded home (the second $25K doesn't apply to school taxes).
- Texas subtracts $100,000 from the assessed value specifically for school district tax purposes.
- Illinois reduces Equalized Assessed Value by $6,000–$10,000 depending on the county.
- Indiana uses a "standard deduction" of $48,000 plus a "supplemental deduction" of 40% of what remains.
- Tennessee has no state-level homestead exemption at all — a rarity.
- Arizona doesn't reduce the taxable base directly but applies a 40% "Homeowner Rebate" on school tax after the fact.
Additional exemptions often stack on top of homestead: seniors (65+), veterans with service-connected disabilities, surviving spouses, and in some states people with certain disabilities. Our individual county pages list the exemptions available for each place. For a deep dive into how homestead works state by state, see the homestead exemptions guide.
Step 4: The combined tax rate is applied
Finally, the taxable value (after assessment ratio and exemptions) is multiplied by the combined tax rate of every taxing authority that covers your parcel.
In most states, the rate is expressed as a percentage or as "dollars per $100 of assessed value." Florida uses a slightly different convention called mills — dollars per $1,000. One mill equals 0.1% or $1 per $1,000. A Florida millage of 20 is equivalent to 2% or $2 per $100.
The combined rate adds up several separate levies. A typical Harris County (Houston) homeowner, for example, pays into at least five entities:
- Houston Independent School District
- Harris County (general fund)
- City of Houston
- Harris County Hospital District
- Houston Community College
In Illinois, the list can easily reach a dozen — school districts, park districts, library districts, township, county, city, community college, forest preserve, water reclamation. This is why Illinois's nominal rates look so high: the state has over 8,500 separate local taxing districts, more than any other state.
Step 5 (sometimes): A cap overrides the calculation
Several states add a final step: if your calculated tax exceeds a constitutional cap, the cap wins.
- Indiana caps homestead property tax at 1% of gross assessed value. If your computed bill would exceed that, the excess is forgiven.
- Arizona caps primary property tax on Class 3 residences at 1% of Limited Property Value.
- Florida's "Save Our Homes" caps the annual growth in assessed value at 3% (or CPI, whichever is lower) — not the total amount.
For the details on each state's cap system, see the property tax caps guide.
Putting it all together
Here's a complete calculation for a hypothetical $400,000 home with homestead exemption in three states, using approximate rates:
The differences aren't just about rates — they're about what those rates apply to. That's why you can't just compare "the property tax rate in Texas vs. Florida" as a single number. Use the compare tool to run an apples-to-apples calculation on any home value across any two counties we cover.
Next up: Homestead exemptions, explained for all six states — the single most valuable tax reduction available to most homeowners, and the one most commonly left unfiled.