A Q&A on “Assessed Value”: How Tax Officials Decide What Your Deed Is Worth

Deed holders pay taxes for owning property. The value of a deed to a tax assessor is not the same as the value assigned by the market or by a real estate appraiser. The property’s tax basis is called its assessed value.

To simplify: the deed holder pays taxes on the assessed value of the home. Typically, the assessed value will be less than the market value.

Although many local governments do discount property assessments, many deed holders pay thousands of dollars a year in property taxes.

What do tax assessors take into account?

The county assessor’s office gets its information from those who do the actual tax calculations: local governing bodies with the power to tax.

This is a result-driven process. Your local government puts together a budget. Based on local needs, it determines the necessary revenue. Then the departments apply their local millage rates to meet their budgets.

When assessing individual properties, officials do look at market trends. The location of the home, its dimensions, its lot size, its features and improvements all come into play.

How do local millage rates work?

Property taxes are set by a state- and county-specific formula.

In tax talk, “mill” means one thousand. The mill rate, or millage rate, stands for tax per $1,000 of assessed value. Townships, counties, and school boards will each establish their own mill rates; combined, they dictate a property tax bill.

You take the assessed value and multiply it by the mill rate and divide by 1,000 to calculate tax. Generally, a mill rate for homes will be higher than for farm property, and lower than for commercial property.

Which states have the highest and lowest property taxes?

Property taxes are all over the map! Indeed, this property tax map speaks louder than words.

If your home is in California, Massachusetts, New Hampshire, New Jersey, Vermont, Illinois, or New York, you know the feeling. Connecticut’s rate of 1.66% is also on the high end.

The highest property taxes of all are in New Jersey.

Alabama and West Virginia residents pay the least. Other states with relatively low property taxes include Arkansas and Mississippi.

It all depends on what property taxes fund in your state. Your taxes could be paying for medical and emergency services, community colleges, libraries, infrastructure, and disability assistance programs.

The lion’s share of your property taxes probably goes to your school district. For this reason, you should be able to get a sense of what’s going on with the next year’s property taxes by following school board meeting minutes.

How often will my property taxes change?

Depending on where the home is, possibly every year or every two years.

Occasionally, local governments lower property taxes. States have to follow their constitutions and may not engage in unfair takings when property valuations rise. But property taxes have a tendency to go up, following real estate values in general. And a lot of people questioned the fairness of recent property tax hikes.

Some areas leave taxes as they are unless and until there’s a change in circumstances. An upheaval in market conditions, for example, may lead to a call for reassessments. Assessments can also be updated after a major construction or rezoning project.

Also, a deed transfer could trigger a reassessment. If so, the taxes will change from one owner to the next.

Can local governments foreclose for unpaid property taxes? Yes, but they are not supposed to profit from it. Keeping the profits over and above the debt that a taxpayer owes, according to the U.S. Supreme Court, offends the federal Constitution’s Fifth Amendment.

Will my property taxes change after a home improvement?

Deed holders can expect property taxes to be around 1% to 2% of their homes’ value. Given that the value of a home often rises, so do taxes. And deed holders can boost their property values by making improvements to their homes. 

So yes, the tax assessment on your home could go up after home improvements. Adding a backyard cottage, say, or any other value-lifting upgrade could raise your property taxes.  

When the tax changes, is the mortgage company aware?

For most people paying off home loans, a mortgage company pays the property taxes from the homeowner’s escrow account. And yes, a mortgage company gets the memo and normally adjusts the borrower’s monthly payment whenever insurance or tax bills change.

It never hurts to double-check. Call the mortgage company when questions arise.

Are discounts available for seniors or people in certain income brackets?

Some states allow tax deferrals based on age and income. Small rebates on Pennsylvania property taxes are available for those making under $48,110 (as of 2026). Numerous other states also offer property tax relief to seniors and people in low-income brackets; search online for information from your state’s revenue site. And watch for updates.

Note that taxpayers who itemize deductions can get breaks for property taxes on their federal returns.

I bought a home and received a homestead exemption form. Will it lower my property taxes?

Yes. If this exemption is available to you, it will lower your property taxes on your primary residence. Fill out the homestead exemption form and opt in by the deadline; doing so will cut the taxable portion of your home’s assessed value.  

My property taxes are higher than those on similar nearby homes. Should I hire someone to get my home reassessed?

Some companies advertise this service to deed holders. But you can take the initiative yourself.

Check with your state for the timeline and deadline for appealing your tax assessment. You might need to file an appeal within 30 or 90 days of the latest assessment. You might need to speak with the county assessment office first.

Can I mention wear and tear on the home to bring down my taxable property value?

It’s possible. If there are issues that erode the market value of your home, you can gather the evidence on that score. Maybe your foundation is cracking, or other structural issues have developed over time.

Relevant documentation, including photos, could support your objection to your most recent assessment. Your local tax office may have an online portal for uploading the documentation.

What reasons are acceptable for getting property taxes lowered?

There are many situation-specific reasons. A successful assessment appeal might set forth evidence that:  

• A licensed, independent appraiser found that the home or neighborhood has depreciated, not appreciated, in value.

• A deed’s property description is incorrect, leading to an inflated assessment.

• The assessment is far off from those of similar nearby homes in similar condition.

• Damage has occurred that warrants a lower valuation.

Understanding how homes are assessed for tax purposes and how to respond to erroneous assessments is part of an experienced deed holder’s wisdom and may even lead to a tax cut. In that case, paying attention pays off!