Property Tax Glossary

Twenty essential property tax terms defined in plain English.

Assessed Value: The dollar value a taxing authority assigns to your property for the purpose of calculating your tax. It is derived from your market value by applying the state’s assessment ratio, so it is often lower than what your home would actually sell for. Your tax bill is based on this number, not on market value directly, which is why an inaccurate assessed value can cause you to overpay.
Assessment Appeal: A formal request to have your property’s assessed value reviewed and lowered because you believe it is too high. Homeowners support appeals with comparable sales and evidence of factual errors in the property record. Appeals must be filed within a strict deadline, and a successful appeal reduces your taxable value for years, not just the current tax year.
Assessment Ratio: The percentage of a property’s market value that is subject to taxation. If the ratio is 40 percent and your home is worth $250,000, your assessed value is $100,000. Ratios vary widely between states, which is why raw tax rates cannot be compared without also knowing the ratio each state uses.
Board of Equalization: A local or state body that hears property tax appeals and works to ensure assessments are fair and consistent across a jurisdiction. If an informal review with the assessor does not resolve your dispute, the Board of Equalization is often the next step where you present your evidence and receive a formal decision on your assessed value.
County Assessor: The government official responsible for determining the value of all taxable property in a county. The assessor maintains property records, conducts reassessments, applies exemptions, and provides the assessed values used to calculate tax bills. Your county assessor’s office is the primary place to verify your value, correct errors, and apply for exemptions.
Effective Tax Rate: The percentage of your home’s market value that you actually pay in property tax each year, calculated as annual tax divided by market value. Unlike the nominal rate, the effective rate accounts for the assessment ratio, making it the only fair way to compare property tax burdens between different states and counties.
Exemption: A reduction in the taxable value of your property that lowers your tax bill. Common exemptions include homestead, senior, veteran, disability, and agricultural programs. Some exemptions apply automatically, but most require an application by a deadline. Claiming every exemption you qualify for is one of the simplest ways to reduce what you owe.
Homestead Exemption: An exemption that reduces the taxable value of your primary residence. Available in nearly every state, it is often the largest tax break an ordinary homeowner can claim. Because it applies only to the home you actually live in, second homes and rental properties do not qualify. Most states require a one-time application with proof of residency.
Levy: The total amount of money a taxing authority decides to raise through property taxes, or a specific voter-approved charge for a defined purpose such as a school bond or a parks district. Levies are added on top of the base tax rate and help explain why bills differ between otherwise similar properties in different districts.
Market Value: The price your property would realistically sell for in an ordinary transaction on the open market today. Assessors estimate market value using recent comparable sales, property characteristics, and location. Market value is the starting point for calculating your assessed value, and comparing it to your assessed value helps determine whether an appeal is worthwhile.
Mill Rate: The tax rate expressed as dollars per $1,000 of assessed value. One mill equals one dollar of tax per $1,000, so 25 mills equals 2.5 percent. Your total mill rate combines the rates of every taxing authority covering your property, which is why your rate can rise when any single authority increases its portion.
Nominal Tax Rate: The stated tax rate applied to your assessed value, before accounting for the assessment ratio. A high nominal rate can be misleading because it may apply only to a small fraction of your home’s value. To understand your true burden, convert the nominal rate into an effective rate based on market value.
Over-Assessment: A situation where the county has valued your property higher than its true market value, causing you to pay more tax than you should. Over-assessment is the primary justification for an appeal. You demonstrate it by presenting recent comparable sales or documenting errors in your property record that inflated the value.
Personal Property Tax: A tax on movable property such as vehicles, boats, business equipment, or machinery, as opposed to real property like land and buildings. Not every state levies personal property tax, and rules vary widely. Where it applies, it is assessed and billed separately from the tax on your home and land.
Property Tax Bill: The official statement from your taxing authority showing your market value, assessment ratio, assessed value, the rates charged by each taxing body, any exemptions applied, and the total amount due with payment deadlines. Reading it line by line lets you confirm the details are correct and that all your exemptions have been applied.
Reassessment: The process of updating a property’s assessed value to reflect current conditions. Reassessments happen on a regular cycle that varies by jurisdiction, and can also be triggered out of cycle by a sale, permitted improvements, or a change in use. A reassessment can raise or lower your value depending on how the market has moved.
SALT Deduction: The federal deduction for state and local taxes, including property taxes, available to taxpayers who itemize. It is subject to a cap that limits the total deduction for combined state and local taxes. The SALT cap can reduce the federal tax benefit of paying large property tax bills, especially in high-tax states.
Special Assessment: A charge levied on property owners to pay for a specific local improvement that benefits their properties, such as new sidewalks, sewer lines, or streetlights. Unlike the general tax rate, a special assessment is tied to a particular project and typically applies only to the properties in the affected area.
Tax Lien: A legal claim placed on your property by the government when property taxes go unpaid. The lien secures the amount owed and can be sold to investors or, if the debt remains unpaid, lead to foreclosure and sale of the property. Resolving unpaid taxes quickly is essential to avoid escalating penalties and the risk of losing your home.
Tax Roll: The official list maintained by the assessor of all taxable property in a jurisdiction, along with each property’s assessed value, owner, and applicable exemptions. The tax roll is the master record used to generate tax bills. Ensuring your property is listed accurately on the tax roll helps guarantee you are billed correctly.