Property Tax
An annual local government levy on real estate value, calculated as a millage rate times the assessed property value.
What is Property Tax?
Property tax is a recurring tax levied by local governments — counties, municipalities, and school districts — on the assessed value of real estate and, in some jurisdictions, personal property such as vehicles. It is calculated by multiplying the assessed value of the property by the local tax rate, often expressed in mills (thousandths of a dollar per dollar of assessed value). Property taxes are the primary funding source for public schools and local services in the US.
Example
A home assessed at $400,000 in a county with a combined 1.2% effective property tax rate generates an annual tax bill of $4,800. In high-tax states like New Jersey or Illinois, effective property tax rates can exceed 2%, adding significantly to homeownership costs beyond the mortgage payment.