Property Tax Formula Explained
The math behind the Property Tax Calculator: the equation, the variables, and the assumptions it makes.
By Onias Derilus, Mortgage Capital · NMLS# 1859012 · Last Updated: June 2026
It estimates your annual and monthly property tax based on the home's assessed value, the local millage rate, and any exemptions you qualify for.
The Formula
Annual tax = (assessed value − exemptions) × millage rate
Property tax is the assessed value times a local rate, often quoted in mills (dollars per thousand of value). Exemptions reduce the taxable value before the rate is applied, lowering the bill.
The monthly figure matters for your mortgage because lenders collect property tax in escrow as part of your payment. The calculator gives both the annual bill and the monthly escrow amount.
Turn Your Property Tax Estimate Into a Real Pre-Approval
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