Property Tax Explained for New Owners
The 4-step calculation, the exemptions you have to claim in your first 60 days, and the 2026 state-by-state effective rates — so you know what your bill will be before it arrives.
How the bill is calculated
2026 effective rates (sample)
| State | Effective rate | Note |
|---|---|---|
| New Jersey | 2.23% | Highest in US |
| Illinois | 2.08% | |
| New Hampshire | 1.93% | |
| Connecticut | 1.79% | |
| Texas | 1.68% | No state income tax |
| New York | 1.40% | |
| Massachusetts | 1.14% | |
| California | 0.71% | Prop 13 cap |
| Colorado | 0.51% | |
| Hawaii | 0.27% | Lowest in US |
Source: HomeScore 2026 Annual Cost Report aggregation. See all 50 states.
Estimate your full first-year cost
Property tax is one of 7 first-year cost categories. The Starting Diagnostic surfaces all 7 and benchmarks them by state.
Frequently asked
How is property tax calculated?+
Assessed value (set by your local assessor) × tax rate (set by your municipality), minus any exemptions you qualify for. The 2026 US median effective property tax rate is 1.03% of market value, but it ranges from 0.27% (Hawaii) to 2.23% (New Jersey).
When do I pay my first property tax bill as a new owner?+
It depends on jurisdiction. Most lenders escrow property tax monthly with your mortgage. If you pay directly, the first bill usually arrives 60–180 days after closing. Always confirm the schedule with your title company at closing.
Will my property tax go up after I buy?+
Often yes. Many jurisdictions reassess on sale, using your purchase price as the new market value baseline. Even without reassessment, mill rates can increase annually. Budget for 3–8% growth per year as a rule of thumb.
What's a homestead exemption and how do I apply?+
It reduces the taxable value of your primary residence — savings of $400–$2,500/yr typically. Apply through your county assessor or tax office within 30–90 days of closing (deadlines vary). Required documents: deed, ID, sometimes utility bill.
Can I appeal my property tax assessment?+
Yes. If your assessment is higher than comparable recent sales, file an appeal with your county board of assessment review — windows are usually 30–60 days after the assessment notice. Success rate when comparables clearly support a lower value: 40–60%.