Edited by Marianne HayesHow to Lower Your Property Taxes
Quick Answer
You might be able to reduce your property tax bill if you:
If your property value is on the rise, that's probably good news for your finances, especially if you're looking to sell your home or tap into your home equity. Over the last five years, the average homeowner has gained $140,900 in housing wealth, according to the National Association of Realtors (NAR). But there is one important caveat: Higher home values also tend to bring higher property taxes.
Property data firm ATTOM reports that the average annual property tax on a single-family home in 2024 was $4,172, up 2.7% from the year before. Lowering your property tax bill isn't easy, but if you think your property taxes are too high, you aren't necessarily out of options. Follow these tips to potentially reduce your property taxes.
How Are Property Taxes Calculated?
Your property tax bill is based on your local millage (or mill) rate and the assessed value of your property. The mill rate is the standard property tax rate charged in your city or county, and it can vary widely from one town to the next.
In most areas, "one mill" is equal to $1 for every $1,000 of assessed property value. If your property tax rate is 5.37 mills and your property value is $500,000, your tax bill would be $2,685 (or 0.537%). But that number could be much higher in other areas. In 2023, the effective tax rate in Illinois was 1.83%, according to the Tax Foundation.
Why Do Property Taxes Go Up?
There are three main reasons your property taxes increase:
- Your assessed value increases
- Local tax rates increased
- You've been hit with a special assessment
Your property tax bill can increase because of a combination of one, two or all three of these reasons in any given year.
When your property taxes go up, it's often because your assessed value has increased. This can happen if home prices on the whole are moving upward, or you've made home improvements that have made your property more valuable. Local tax rates can also change. If this happens, it can be difficult to dispute. Property tax mill rates are standard for all taxpayers in a given area, so it may be hard to argue that your rate is unfair.
Your property tax bill can also increase if you get hit with any special assessments. For example, there may be projects in the works to install new streetlights or improve local landscaping. That could result in a temporary increase, but it's probably not something you can dispute or decline.
Now for the big question: How can you lower property taxes? Below are five options to consider.
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1. Check Your Tax Card
Your tax card can show you the information your local assessor's office used to determine your property's assessed value. That includes the:
- Lot size
- Square footage
- Number of rooms
- Age of the home
- Building features
- Notable home improvements, including additions
Review your tax card for errors or inaccuracies that might be inflating your tax bill. For example, if your tax card lists four bedrooms but your home only has three, the assessed value may be incorrect.
2. Compare Your Taxes With Your Neighbors'
Tax cards are public information, which makes it easy to look up comparable properties in your neighborhood. Minor differences in assessed value are normal, but if your tax bill is way out of line with what your neighbors with similar homes are paying, you may have a case for challenging your valuation.
For example, you might find comparable properties that have lower assessed values, or larger, higher-end houses that have similar values when compared to your home.
Learn more: What Are Real Estate Comps?
3. Request a Revaluation
If you're confident your property's assessed value is higher than it should be, you can contact your local tax assessor's office to request an appeal. You may be able to walk through your property with the assessor and point out important details that make your property less valuable. Get organized by gathering:
- Photos that help demonstrate that your home is currently overvalued
- Supporting documents that can help strengthen your case, like the assessed values of comparable properties in your area
But you'll only want to seek a revaluation if the facts are on your side. Otherwise, the assessor could determine that your property is actually worth more than they initially calculated. In that case, you might end up with even higher property taxes.
Arranging for a home appraisal can help clarify where you stand, but be prepared to foot the bill. HomeAdvisor puts the average cost of an appraisal at $358 for a single-family home.
4. Avoid Major Improvements
Certain home improvements may increase your home value. And if those upgrades are visible from the outside of your home, it could cause your local assessor to bump up your property's assessed value. That might happen if you build an external garage or add an extension to your home.
If your main concern is reducing your property taxes, you might hold off on making these kinds of improvements. But remember that increasing your home value is usually a good thing. It could increase your home equity and allow you to turn a larger profit when it comes time to sell. In the meantime, renovations big and small can improve your quality of life. Just be sure to account for a potential property tax increase when making your budget.
Learn more: How to Pay for Home Improvements
5. Apply for Exemptions
You may not have to dispute your home's value to lower your tax bill. Many cities and counties offer exemptions to seniors, people with disabilities and veterans. If the home is your primary residence, you might also qualify for the homestead exemption. This would exclude a portion of your home value from your total assessed value.
What's more, certain low-income homeowners are exempt from paying part of their property tax. Find out what exemptions and credits are available in your area. It might allow you to reduce your property tax bill without having to fight city hall.
Frequently Asked Questions
The Bottom Line
Property taxes are a key factor when determining how much house you can afford. Local tax rates are out of your control, but it may be possible to reduce your tax burden in other ways. What matters most is staying up to date on what you owe. If you have an escrow account with your mortgage lender, property taxes are likely baked into your monthly payment.
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About the author
Marianne Hayes
Marianne Hayes is a longtime freelance writer who's been covering personal finance for nearly a decade. She specializes in everything from debt management and budgeting to investing and saving. Marianne has written for CNBC, Redbook, Cosmopolitan, Good Housekeeping and more.
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