For millions of U.S. homeowners, rising property values mean higher property taxes. If your property tax bill has increased in recent years, you aren't alone: The average annual property tax on a single-family home was $3,901 in 2022, up 3.6% over 2021, according to property data firm ATTOM.
Lowering your property tax bill isn't easy, but if you think your property taxes are too high, you can take steps to try reducing your bill. Here are five ways to approach the issue.
How Are Property Taxes Calculated?
First, let's look at how property taxes are calculated. Your property tax bill is calculated by multiplying what's known as the millage (or mill) rate by the assessed value of your property. The mill rate is the standard property tax rate charged in your city or county. If the mill rate in your area is 1% and your assessed property value is $500,000, your property tax is $5,000.
When your property taxes go up, it's often because your assessed value has increased. Your property value may change based on local home prices, improvements you've made or other factors that affect your home's value. Tax rates can also change, but they're difficult to dispute. Property tax mill rates are standard for all taxpayers in a city or county, so it's hard to argue that your rate is unfair.
Your property tax bill can also increase if a bond measure or other temporary funding mechanism is attached to your property taxes—for example, to raise money to improve local schools or fund local police and fire departments. In these cases, an increase may be temporary but it's probably not something you can dispute or decline.
How can you reduce your property tax bill? Here are five steps to consider.
1. Check Your Tax Card
You can request a copy of your property's tax card, which shows the lot size, square footage, room sizes and other features of your home. This is data your tax assessor uses to calculate your property tax.
Review your tax card for errors and inaccuracies that might be inflating your tax bill. For example, if your tax card lists four bedrooms but your home only has three, your home's assessed value might be off.
2. Compare Your Taxes With Your Neighbors'
Tax cards are public information, so you can view tax cards for comparable properties in your neighborhood. Minor differences in assessed value are normal, but if your tax bill is way out of line compared to what your neighbors with comparable properties are paying, you may have a case for challenging your valuation.
3. Request a Revaluation
If you think your property's assessed value is too high, find out how to request a revaluation through your tax assessor's office. You may be able to submit your grounds for challenging the assessor's valuation, such as an incorrect number of bedrooms or bathrooms. In some cases, you may also be able to walk through your property with the assessor to point out any factors you think make your property less valuable.
Here's why you may want to proceed carefully: If your property is revalued, you could end up with a higher assessed value—and higher taxes in turn. You only want to make this move if you're reasonably sure the facts are on your side.
Getting a valuation from an independent appraiser could help you make your case. Be aware, however, that you're likely to have to pay for the appraisal yourself.
4. Avoid or Downplay Major Improvements
Maybe your property value increased because you gave it a glow-up. Giving your aging home a facelift, adding an accessory dwelling unit or installing park-like landscaping in your front yard could be one reason your assessed value has risen. Improvements that are visible from the outside—and can be seen in a drive-by valuation—are especially likely to increase your assessed value.
If your sole concern is keeping your property taxes low, you may want to avoid making these kinds of improvements. However, increasing the value (and livability) of your home can be a good investment, both in your home's value and your quality of life. If you've already done renovations, or you're determined to do them, you may want to build a potential property tax increase into your budget projections.
5. Apply for Exemptions
You don't always have to dispute your home's value to lower your tax bill. You may be eligible for tax credits or exemptions that can lower your property's assessed value. Many cities and counties offer exemptions for senior citizens, disabled people and veterans. Some areas provide a credit when you use your home as a primary residence or for the operation of a nonprofit organization.
Find out what the exemptions and credits are in your area and see whether any are available to you. You might be able to reduce your property tax bill without having to fight city hall.
The Bottom Line
Lowering your property tax bill may not be easy, but reviewing your bill for tax-lowering opportunities can be a good exercise in any case. Property taxes are one of the largest ongoing expenses you'll face when you own a home. Knowing how your property taxes work may help you avoid some tax increases—and anticipate the increases you can't avoid.
If you're thinking about financing a home, property taxes can be a key consideration in determining how much house you can afford. To help ensure you get the best interest rates and terms on a home mortgage, you may want to check your credit score and credit report, and make any adjustments to help improve your credit.