Last year, U.S. homeowners faced an average property tax bill exceeding $4,000, marking the highest increase in five years, according to data from Attom Data Solutions, a real estate data firm. Property taxes nationwide amounted to over $363 billion in 2023, reflecting a 6.9% rise, largely attributed to inflationary pressures on local government costs and public employee wages.
States with the highest effective property tax rates included Illinois, New Jersey, Connecticut, New York, and Nebraska, with notable disparities in tax increases observed across different regions, such as a 31.5% increase in Charlotte, North Carolina, and a 15.2% rise in Atlanta.
Property taxes are determined by the assessed value of the property and applying the tax rates for the different taxing authorities for that year. Generally, homeowners are notified of the assessed value of the property for that year, many times, even before the tax rate is set.
There is often a procedure for disputing the assessment, which may involve various processes. In some states, independent appraisal boards convene to review arguments from the taxpayer and a representative of the taxing authority.
To help further understand the process, here are some helpful definitions:
Assessment Process – The local government assesses the value of your property periodically to determine its taxable value.
Taxable Value – This is the value of your property that is subject to taxation, which may not necessarily be the same as its market value.
Tax Challenge – Homeowners have the right to appeal their property tax assessment if they believe it is too high.
Tax Rates – Typically determined by the taxing authority based on funding needs to generate the necessary revenue.
Tax Exemptions – Some homeowners may qualify for tax exemptions or reductions based on factors like age, disability, or veteran status.
Escrow Accounts – Many homeowners pay their property taxes through an escrow account set up by their mortgage lender, which is included in their monthly mortgage payment.
Tax Due Dates – Property taxes are typically due annually or semi-annually, depending on local regulations.
Penalties for Non-payment – Failure to pay property taxes on time can result in penalties, interest charges, and even the loss of your property through tax foreclosure.
For information about federal income taxes relating to homeownership, download the Homeowners Tax Guide.