To calculate a property tax increase, run this year’s bill and last year’s bill through the same formula and subtract. The formula has four steps: convert market value to assessed value, subtract exemptions to get taxable value, multiply by the mill rate for the ad valorem tax, and add any fixed charges. The difference between the two totals is your increase in dollars; divide by last year’s bill to get the percentage.
The math takes about five minutes once you have the inputs. Comparing each input year over year is what tells you why the bill moved.
Gather Three Numbers Before You Start
You need three pieces of information. The first is your property’s current assessed value, which the local assessor mails on a valuation notice (sometimes called a notice of appraised value or assessment notice). That notice usually shows last year’s value alongside this year’s, which is exactly what you need for a comparison.
The second is your local tax rate, typically expressed in mills. It appears on your prior tax bill, on the tax collector’s website, or on a rate notice sent before the new rate takes effect. The third is any exemptions you’ve been granted, such as a homestead exemption; these show up on your prior bill or in the assessor’s online property record. Pull the same three numbers for last year so you can run both calculations side by side.
Step 1: Convert Market Value to Assessed Value
Most jurisdictions don’t tax the full market value of your property. They apply an assessment ratio that converts market value into a lower assessed value. Ratios vary widely, from full market value down to as little as 6 percent, or as high as 45 percent for certain property classes. The ratio that applies to your property is set by local or state law, and the result should already appear on your valuation notice.
The math is simple: market value times the assessment ratio. A home with a $300,000 market value in a jurisdiction that assesses at 80 percent has an assessed value of $240,000. That assessed value, not the market value, is the starting point for your tax. Getting this step wrong throws off everything after it.
Step 2: Subtract Exemptions to Find Taxable Value
Subtract any exemptions you qualify for from the assessed value. The most common is the homestead exemption, which reduces the taxable value of a primary residence. Exemption amounts range from about $10,000 to $200,000 depending on the jurisdiction, and a handful of places impose no dollar cap at all. To qualify, you generally need to own and occupy the home as your primary residence on a specific date each year.
Beyond the standard homestead exemption, many jurisdictions offer additional reductions for seniors, veterans, people with disabilities, and low-income homeowners. Check these every year, because eligibility rules change and some exemptions require annual renewal. If you recently bought the home or forgot to file, you may be paying tax on a higher value than you need to.
Continuing the example, an assessed value of $240,000 minus a $50,000 homestead exemption leaves a net taxable value of $190,000.
Step 3: Apply the Mill Rate
One mill equals one dollar of tax for every $1,000 of taxable value.1Legal Information Institute. Millage To use the rate in a calculation, divide it by 1,000 to get a decimal. A rate of 20 mills becomes 0.020. A rate of 15 mills becomes 0.015.
Then multiply your net taxable value by that decimal. Taxable value of $190,000 at 20 mills works out to $190,000 × 0.020 = $3,800. That $3,800 is the ad valorem portion of the bill, meaning the part based on your property’s value. Your total bill will usually include other charges on top of that.
Step 4: Add Fixed Charges to Get the Total
Most tax bills include non-ad valorem charges, which are flat fees that don’t move with your assessment. They cover services like stormwater management, trash collection, street lighting, or fire rescue. Because they’re flat rather than percentage-based, they don’t rise with your assessed value, but local boards can raise them independently through public hearings.
Add every fixed charge on the bill to the ad valorem amount. A value-based tax of $3,800 plus $350 in fixed fees produces a total of $4,150. One detail worth knowing for later: these service charges are not deductible on your federal return, even though they sit on the same bill as your property taxes.2Internal Revenue Service. Publication 530 – Tax Information for Homeowners
Step 5: Subtract Last Year’s Bill From This Year’s
With both totals in hand, the increase is a subtraction. If last year’s bill was $3,700 and this year’s is $4,150, you’re paying $450 more.
The dollar figure tells you what to budget. The percentage tells you how fast your taxes are climbing. Divide the dollar increase by last year’s total: $450 ÷ $3,700 = 12.2 percent. Track that percentage across several years to see the trend. If your taxes are growing 8 to 12 percent a year while your income grows at 3 percent, something needs to change, whether that’s claiming an exemption you missed or challenging the assessment.
Figure Out What Drove the Increase
Once you know the dollar amount, work backward through the formula to find the cause. Every property tax increase traces to one of three things: a higher assessed value, a lower exemption, or a higher tax rate. Compare each input to last year’s version.
If the assessed value jumped, the most common reason is periodic reassessment catching up to rising market values. Renovations that required a building permit — additions, garage conversions, finished basements, new pools, gut kitchen or bathroom remodels — can also trigger a reassessment outside the normal cycle. Routine maintenance like repainting or replacing carpet generally doesn’t. In some states, a sale resets the assessed value to the purchase price, and new buyers may get a supplemental bill covering the gap for the remaining months of the fiscal year.
If the mill rate rose, school districts, counties, cities, and special districts each set their own portion of the rate, and a change by any one of them lifts the total. If an exemption dropped off, it’s often because you moved, the property changed hands, or an annual renewal wasn’t filed. Each cause has a different fix, so identifying which input moved matters.
How the Increase Reaches Your Monthly Mortgage Payment
Most homeowners don’t write a check to the tax collector. The mortgage servicer collects property tax through escrow as part of the monthly payment. When taxes go up, the escrow account runs short, and the monthly payment rises to close the gap.
Federal law requires servicers to review your escrow account at least once a year to confirm it holds enough for upcoming tax and insurance bills.3eCFR. 12 CFR 1024.17 – Escrow Accounts If the analysis finds a shortage, the servicer must offer you the option to repay it in equal installments over at least 12 months rather than demanding it all at once.4Consumer Financial Protection Bureau. 12 CFR 1024.17 – Escrow Accounts Servicers can also hold a cushion of up to two months’ worth of escrow payments as a buffer.
If you get a letter saying your mortgage payment is going up and you didn’t refinance, a property tax increase is almost always the reason. You can usually pay the shortage in a lump sum to keep the monthly payment lower, or let the servicer spread it over the next year. Running your own calculation before the escrow analysis arrives means the adjustment won’t blindside you.
Challenging an Assessment You Think Is Wrong
If the increase traces back to an assessed value you believe is too high, you have the right to appeal. The grounds for a successful challenge are fairly consistent across jurisdictions.
The strongest cases involve factual errors: the assessor’s records show the wrong square footage, an extra bedroom that doesn’t exist, or a finished basement that’s actually unfinished. Photos or a floor plan usually settle those. The second common ground is unequal assessment, where comparable homes nearby carry significantly lower values. Third, if you recently bought the property for less than the assessed value, the sale price itself is evidence.
Deadlines are tight. Most jurisdictions give 30 to 90 days after the valuation notice to file. Miss it and you generally wait a full year. Start with an informal call to the assessor’s office, because clerical errors sometimes get fixed that way. If that doesn’t work, file a formal appeal with the local review board and present your evidence at a hearing.
Hiring a licensed appraiser to produce an independent valuation strengthens your case, especially for larger disputes. Private appraisals for a single-family home typically run $300 to $1,200, so weigh that cost against the potential tax savings over multiple years.
How the Increase Affects Your Federal Deduction
Property taxes on your home are deductible on your federal return if you itemize, but there’s a ceiling. For the 2026 tax year, the combined deduction for state and local income taxes (or sales taxes), real property taxes, and personal property taxes is capped at $40,400, or $20,200 if you’re married filing separately.5Office of the Law Revision Counsel. 26 USC 164 – Taxes The cap starts phasing down once modified adjusted gross income exceeds $505,000, and it can’t drop below $10,000.
Not everything on the tax bill qualifies. The IRS counts only the ad valorem portion as a deductible real estate tax. Itemized charges for services like trash collection and water delivery, assessments for improvements like new sidewalks, HOA assessments, and transfer taxes are all nondeductible.2Internal Revenue Service. Publication 530 – Tax Information for Homeowners If you pay through escrow, the deduction applies in the year the servicer actually pays the taxing authority, not when you send the monthly payment to the servicer.
When your property taxes go up, recalculate whether you’re bumping against the SALT cap. If your state income taxes and property taxes combined already exceed $40,400, the increase costs you real money but won’t produce any additional federal benefit. That’s worth knowing when you’re weighing whether the savings from an appeal justify the effort.