Property Taxes: What You Pay, What You Get, and How to Pay Less

Maybe this sounds familiar: a retired hairdresser paid off her mortgage years ago. Now the property tax bill comes to her instead of the bank, and it is larger than it was when she retired.

This guide explains what the tax is, how the amount is set, what it pays for, and the main ways older homeowners can pay less.

If you are wondering whether sharing your home could affect a tax break you already have, our guide Reverse Mortgages and Property Tax Relief: Myth and Fact covers that question. For how property taxes fit with other pressures on older homeowners, see our Staying Home research.

What property tax is

Property tax is a local tax on real estate. It is based on your home's assessed value, the value a local official called an assessor puts on your home for tax purposes. Counties, cities, school districts, and other local districts all collect it¹.

You owe it whether or not you have a mortgage. Many lenders collect it monthly through an escrow account, a separate account they use to pay your tax and insurance bills. Without escrow, you set money aside and pay the bills on time yourself².

Unpaid property taxes can lead to penalties, a tax lien (a legal claim against your home for the debt), or foreclosure (losing the home to pay the debt)². In some places the home can be sold at a tax sale. In one case, a 94-year-old woman's unpaid taxes of about $2,300 grew to about $15,000 with interest and penalties, and her county sold her condo for $40,000. In 2023 the U.S. Supreme Court ruled that the county's keeping the $25,000 left over could violate the Constitution³.

How the amount is set

Two numbers drive your bill: your home's taxable value and the local tax rate.

• The value. The assessor usually estimates what your home would sell for. Some places tax the full value, and others tax only part of it¹.
• The rate. Each local district, such as the county, city, schools, or fire district, decides how much it needs to raise. Your bill adds up the rates of every district where you live.
• Limits. Many states cap how fast values or taxes can grow. In 2021, 17 states and the District of Columbia (DC) limited how much a home's assessed value could rise between assessments, the times the assessor updates the value¹.

What you get in return

Property tax is how most communities pay for local services. Local governments collected $609 billion in property taxes in 2021, about 30% of the money they raise for general use¹.

• Schools. Local property taxes made up 36% of all public school revenue in the 2020 to 2021 school year⁴.
• Fire, roads, libraries, and parks. In Washington State, for example, property tax districts include fire, emergency medical services, roads, libraries, parks, and hospitals⁵.
• Services for older adults. Some communities vote for a levy, a local tax for one set purpose, to fund aging services. In Butler County, Ohio, for example, a levy helps pay for transportation, meals, adult day services, housekeeping, and repairs, so older residents can stay home longer⁶.

What it does not buy: the tax is not tied to how much you use these services, and it does not pay for upkeep on your own home.

Ways to pay less

Relief rules vary by state, and often by county. Start with our page Help with housing costs, state by state, and call your county assessor.

• Homestead exemptions. These take a set amount off the taxable value of the home you live in. Nearly every state and DC offered one in 2021¹. For example, Florida's can reduce taxable value by as much as $50,000⁷.
• Exemptions for older adults, veterans, and people with disabilities. Some states add exemptions based on age, disability, income, or veteran status¹. In Texas, for example, school districts must give a $140,000 homestead exemption, plus $60,000 more for owners 65 or older or with a disability⁸.
• Assessment freezes. These hold your home's value steady, though the bill can still change with tax rates. In Cook County, Illinois, for example, the Senior Freeze is for owners 65 and older with household income of $65,000 or less for 2024⁹.
• Circuit breaker credits. These give a credit or rebate when property tax takes more than a set share of your income. In 2023, 29 states and DC offered one. Seventeen of those limit it to older adults¹⁰. Many states do not use the name "circuit breaker." Look for names like "property tax credit," "homestead credit," "property tax refund," or "rebate" on your state's page.
• Deferral programs. These let older homeowners and people with disabilities postpone paying until the home is sold or the owner dies. In 2021, 27 states and DC offered one, though few people use them¹. Deferred taxes are a debt, not a gift. In Oregon, for example, the state pays the county, charges 6% simple interest, and places a lien on the home¹¹. If you defer, tell the people who will handle your estate.
• Appealing your assessment. If your home's value looks too high, you can usually appeal. In Texas, for example, the deadline is usually May 15 or 30 days after the notice is mailed, whichever is later. Bring photos, repair estimates, and sales of similar homes. You can speak for yourself¹².

What can change your bill

• Adding on. An addition, an accessory dwelling unit (ADU, a small second home on the same lot), or a major remodel usually adds value. In Nevada County, California, for example, a $100,000 ADU raises a $236,500 assessment to $336,500¹³. Ask your assessor before you build.
• A sale or change in ownership. In states with assessment limits, a sale usually resets the value to what the home is worth on the market¹. Ask before you add anyone to your deed.
• Someone moving in. Sharing your home generally does not change how the tax itself is figured. But rent can count as income for relief programs with income limits, and some places treat renting part of a home differently. See Reverse Mortgages and Property Tax Relief: Myth and Fact, Will Sharing My Home Affect My Benefits?, and Taxes on Rent From a Room, in Plain Words.
• A reverse mortgage. Borrowers must keep paying property taxes and homeowners insurance¹⁴. Unpaid taxes and insurance grew from 26% to 45% of federally insured reverse mortgage defaults between fiscal years 2014 and 2018¹⁵.

Watch for

• Paid filing services. Some companies offer, sometimes by official-looking letter, to file your exemption for a fee. In Tarrant County, Texas, the local appraisal office warns that filing directly is free¹⁶. Ask your assessor first.
• Missed renewal deadlines. Some relief must be renewed. Cook County's Senior Freeze, for example, requires a new application every year⁹. Ask whether yours renews on its own.
• A tax sale or lien notice. Call your county and free legal help right away. Do not wait for the next notice.

Conversation starters

If you are an adult child or friend talking with an older adult:

• "Would it help if we put the tax due dates on one calendar together?"
• "Do you know whether you get the homestead exemption? We could check the bill."
• "If you want to appeal your assessment, I can drive you to the hearing."

If you are an older adult talking with family or caregivers:

• "My property tax went up again. Will you help me see what relief I might qualify for?"
• "I'm thinking about a deferral. I want you to know how it works before I decide."
• "Some of these programs need a new form every year. Can you help me remember?"

You owe it whether or not you have a mortgage.

Last reviewed October 14, 2026