Cut Property Taxes in 2025: How You Could Save Thousands

Property taxes are rising in 2025 — but why, and how much? Homeowners across the U.S. are bracing for unexpected increases, with some states seeing hikes of over 10%. If you're wondering why your tax bill looks different this year, you're not alone — and the answers go deeper than inflation.

Property taxes are increasing due to a perfect storm of inflation, rising home values, and lagging assessments.

Here’s what’s behind the spike:

• Inflated home prices following the pandemic led to a surge in tax bases.
• Local governments require revenue to cover the costs of schools, infrastructure, and public services.
• Delayed assessments in some counties are catching up all at once.
• Federal and state policies are shifting burdens locally.

Many homeowners are seeing taxes rise even if their assessed value hasn't changed significantly.

Example: In Texas (ZIP 75001), property taxes have increased by an average of 9.7% YoY due to reassessments catching up with 2021–2022 home value surges.

Bold Takeaway: States with the highest home value growth are seeing the biggest tax jumps — even in places with “low” tax rates.

What Are Property Taxes and How Are They Calculated?

Property taxes are levies imposed by local governments based on the assessed value of real estate properties. The calculation involves two main components:

• Assessed Value: Local tax assessors determine this value, which may be a percentage of the property's market value.
• Tax Rate: Often referred to as the millage rate, it's the amount per $1,000 of assessed value that homeowners must pay.

For example, if a home is assessed at $200,000 and the local tax rate is 1%, the annual property tax would be $2,000.

The average effective property tax rate (percentage of home value paid annually) in the U.S. is 0.90% as of 2025. However, this varies widely:

• Hawaii: 0.27% ($2,309 annually on a $855,259 home)
• New Jersey: 2.33% ($9,345 annually on a $401,400 home)

Rates typically reflect a state’s reliance on property taxes versus other revenue sources like income or sales taxes.

As of 2025, No U.S. state eliminates property taxes, but five states have rates below 0.55%:

States with low property taxes compensate by generating revenue through other means like:

• Alternative Taxes: Higher sales or income taxes can offset lower property tax revenues.
• Natural Resources: States rich in natural resources, like oil or minerals, may use revenues from these industries to fund public services. This can reduce reliance on property taxes.
• Tourism: High tourism income can bring in a lot of money. This helps lower property taxes for residents.

For instance, Hawaii uses tourism-related taxes, while Alaska leverages oil revenues.

The following states have the highest property tax burdens:

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Several factors can cause higher property taxes:

• Public Services Funding: States that spend a lot on public services like education and infrastructure usually need higher property taxes to fund these efforts.
• Local Government Reliance: In some regions, local governments depend more on property taxes. This is due to limited alternative revenue sources.
• High Property Values: When property values go up, property tax bills also increase, even if the tax rate isn’t very high.

Property taxes have risen in recent years. They reflect higher home values and local government funding needs. In 2024, property taxes for single-family homes rose by 5.1% from last year. The median payment was $3,018.

Home price forecasts predict a 2%-3% rise by 2025, reaching record highs. This may lead to higher property taxes soon.

Given these trends, homeowners should anticipate ongoing annual property tax increases. The exact amount will vary based on local assessments and budgetary requirements.

Homeowners can try different strategies to manage and lower their property tax.

• Homestead Exemption: This lowers the taxable value of a primary home. It helps reduce property taxes for homeowners. Eligibility and exemption amounts vary by state and local jurisdiction.
• Senior Citizens Exemption: This exemption is for homeowners, usually 65 or older. It reduces the property's assessed value to provide tax relief. In New York, eligible seniors can get a 50% cut in their home's assessed value. This depends on their income and local rules.
• Veterans Exemption: This exemption honors military service by reducing property taxes for eligible veterans. The benefits can differ by state. Some provide a fixed dollar amount, while others give a percentage decrease in assessed value.
• Disability Exemption: Homeowners with qualifying disabilities may receive property tax relief through this exemption. In Illinois, the Homestead Exemption for Persons with Disabilities gives a $2,000 annual reduction in the EAV of a disabled person's primary, owned, and occupied residence.
• Low-Income Exemption: Some municipalities offer property tax exemptions to residents whose income falls below a specified threshold. For example, the city of Detroit provides varying tax exemptions based on household size and income. Households of two earning $24,000 receive a 100% exemption. Households of three with an income of $32,000 get a 25% exemption.

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If you’re receiving help from family for your down payment, make sure you provide a gift letter to avoid loan processing delays that can affect your exemption eligibility.

You may be able to appeal or reduce your tax bill — but act fast.

Ways to reduce your property tax:

• File a property tax appeal - especially if your home value dropped
• Claim all exemptions (homestead, senior, disabled veteran, etc.)
• Audit your property card for incorrect info (square footage, additions)

Tip: In Florida, filing a homestead exemption can save you up to $50,000 in assessed value, potentially cutting hundreds off your annual bill.

Will Property Taxes Go Down in the Future?

If you're hit with high property taxes after buying, a recast mortgage might help reduce your monthly payment without needing to refinance.

Predicting future property tax trends is challenging. While some states are exploring measures to cap or reduce property taxes, others may increase rates to meet budgetary needs.

Short-term relief is emerging in two states:

• Illinois: Expanded senior exemptions now cover 100% of taxes for households earning less than $75K.
• New Jersey: $2B “StayNJ” program cuts senior property taxes 50% by 2026.

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Rising home prices + tighter local budgets = your 2025 tax spike.

• Home values jumped ~3% in 2024–2025, inflating assessments.
• Localities boosted mill rates to fill revenue gaps.
• Median bill hit $3,500 in 2024, a notable rise from 2023’s $3,018.

A mix of sharp home value increase (+2–3%) and levy adjustments by municipalities.

No U.S. states will eliminate property taxes—but senior savings and small refunds are expanding.

No state is abolishing them, but Illinois and New Jersey are expanding relief programs:

• Illinois now exempts seniors earning < $75K entirely.

• New Jersey’s StayNJ fund caps senior taxes at half through 2026.

Nationally, no sharp declines expected; modest 2–3% yearly growth likely.

Extremely unlikely; states will increase other taxes instead.

Lower taxes often mean fewer services—but sometimes, you win both.

• Lower monthly housing cost
• Easier to qualify for mortgages
• Often offset by tourism or natural resource income

• Fewer public services (schools, transit, fire)
• Higher sales/income taxes in some states
• May lack tax-funded homeowner benefits (e.g., rebates)

Relocating for tax relief can save you $5K+ per year—but it’s not always a win.

• Example: Moving from New Jersey (2.33%) to Nevada (0.50%) on a $400K home saves you ~$7,300 annually.
• Consider closing costs, job market, and quality of public services.
• Retirees or remote workers benefit the most from low-tax relocations.

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Local governments reassessed properties post-home price surge and raised mill rates—causing a national 16% median increase.

No states plan total elimination. Some, like Illinois and New Jersey, are rolling out senior relief—but total removal isn’t in state budgets.

Likely not—expect modest 2–3% yearly hikes tied to rising home values and local spending needs.

National effective rate ≈ 0.90%, ranging from 0.27% (Hawaii) to 2.33% (New Jersey).

States like Hawaii, Alabama, and South Carolina offer low rates and strong senior exemptions.

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