Your annual property tax bill equals your assessed value multiplied by your local effective tax rate. Here is how that simple formula actually works.
Property taxes are calculated with one formula: assessed value multiplied by the effective tax rate equals your annual property tax bill. The county assessor sets the value. Local governments, including the county, city, and school district, set the rates. The tax bill is simply the product of those two numbers.
How does the property tax formula work?
The formula is assessed value times effective tax rate equals annual tax bill. Your assessed value is what the county assessor believes your home is worth for tax purposes. The effective tax rate is the combined millage set by every taxing body whose boundaries cover your property.
A home assessed at $400,000 in an area with a 1.25% effective tax rate generates a $5,000 annual tax bill. Change either number and the bill changes. Because assessors value hundreds of thousands of homes at once using a statistical model that weighs many variables, the assessed value side of the equation is where errors most often land.
What does this mean for you?
The tax bill is a simple multiplication, so you have two levers and only one is within reach. Rates are set by elected bodies and apply to everyone in the taxing district. The assessed value is property-specific, and it is the only side of the formula that a property tax appeal can change.
If your home's assessed value looks too high for your street, the formula works in reverse when you successfully challenge it. Fair Appeal reviews homes to see whether the assessed value side of that equation is too high, files the appeal when it is, and only charges if the appeal wins.