Assessed value vs appraised value: what the difference means for your tax bill

Last updated 2026-07-09

What is appraised value for property tax purposes?

Appraised value is the assessor's estimate of what your property would sell for between a willing buyer and a willing seller with no unusual pressure on either side. Some states call it "fair market value" or "full cash value." The core idea doesn't change.

This is different from a mortgage appraisal. When a bank orders an appraisal before a loan closes, a licensed appraiser visits your home, inspects the interior, and runs a formal sales-comparison analysis. County assessors rarely do that. They use a mass appraisal system, which is a statistical model that estimates value for thousands of properties at once using sales data, property characteristics pulled from permit records, and computer-assisted valuation software. The International Association of Assessing Officers sets accuracy standards for mass appraisal, and it calls for the median ratio of assessed-to-sale price to fall within 10% of the jurisdiction's stated assessment level, with a coefficient of dispersion below 15% in most residential markets ^[1].

Mass appraisal is an estimate, so it carries error. Studies of large urban counties routinely find that 20% or more of residential parcels are appraised outside a 10% band around true market value. Nobody has precise national numbers on this, but the Lincoln Institute of Land Policy has documented systematic regressive assessment errors in cities including Chicago, Detroit, and Philadelphia, where lower-value homes are appraised at higher effective rates than high-value homes ^[2].

So the appraised value on your notice is not gospel. It's a model output, and models miss.

What is assessed value, and how is it calculated?

Assessed value is the dollar figure the tax authority multiplies by the mill rate to produce your bill. In most states, assessed value equals appraised value times an assessment ratio set by law.

The formula is short:

Assessed Value = Appraised (Market) Value x Assessment Ratio

Then:

Property Tax = (Assessed Value - Exemptions) x Tax Rate (mill rate / 1,000)

Assessment ratios swing wildly from state to state. In California, Proposition 13 limits the taxable base to the purchase price (or 1975 base) adjusted by no more than 2% per year, so assessed value can be a small fraction of current market value for long-held homes ^[3]. In Texas, the law says residential property must be appraised at 100% of market value, and assessed value equals that market value minus any exemptions, so the ratio is effectively 1.0 ^[4]. In New York City, Class 1 residential properties are assessed at 6% of market value ^[5].

Here's how a $400,000 home shakes out under different regimes:

State	Assessment Ratio	Appraised Value	Assessed Value	Effective Tax Rate*
California (long-held)	~20% (example)	$400,000	$80,000	0.27%
Texas	100%	$400,000	$400,000	1.6% to 2.2%
New York City (Class 1)	6%	$400,000	$24,000	~0.88%
Illinois (Cook County, residential)	10%	$400,000	$40,000	~1.73% of market

*Effective rates are approximate and vary by municipality. Sources: California State Board of Equalization ^[3], Texas Property Tax Code Sec. 23.01 ^[4], NYC Department of Finance ^[5], Cook County Assessor ^[6].

None of those numbers equals the other. The gap between them is not an error. It's intentional policy.

Why do assessed value and appraised value differ by so much in some states?

Assessment ratios exist for a handful of reasons, and knowing them helps you tell when something is actually wrong on your bill versus when the system is just doing what it was built to do.

Partial assessment ratios started as a way to give assessors room to update values without a full reassessment every year. States later wrote specific ratios into law by property class to hit policy goals: lower ratios for homesteads to ease the burden on residents, higher ratios for commercial property to shift load onto businesses, fractional values for farmland to keep farms working.

California's Proposition 13, passed in 1978, is the loudest example. It capped annual assessed value increases at 2% and reset the base to purchase price on a sale ^[3]. A home bought in 1985 for $150,000 might carry an assessed value near $350,000 today (1.02^40 x $150,000), while its market value is $1.2 million. The appraised and assessed values split by more than 70%.

Illinois uses a 10% assessment ratio for most residential property and 25% for commercial in Cook County, by state statute ^[6]. The mill rate sounds enormous as a result (7% or 8% of assessed value in some Chicago suburbs), but the effective rate on market value is closer to 2%.

Texas runs the opposite way. The Tax Code requires 100% market value appraisal, and the legislature leans on a 10% annual cap on appraised value for homestead property to protect owners from sudden spikes ^[4]. In Texas, appraised value and assessed value sit nearly on top of each other before exemptions, which is unusual among big states.

For a homeowner, the ratio itself almost never matters in an appeal. What matters is whether the appraised value is too high, because that's where you win money.

Which value is on your property tax notice, and which one should you care about?

Your annual notice usually shows both, though the labels vary by state. Texas notices from the county appraisal district show "appraised value," "assessed value" (which may be capped below appraised), and "taxable value" (after exemptions). California shows "assessed value" under Prop 13 rules. New York City mails an annual notice showing "market value," "assessed value," and "transitional assessed value," and the bill runs off the transitional assessed value in most cases ^[5].

The number to challenge is almost always the market value estimate: what your jurisdiction calls appraised value, full cash value, or true market value. That figure is the input into the whole formula. If the assessor overstated it, every downstream number is inflated too.

Before you appeal, pull the assessor's property record card. It holds the data the mass appraisal model used: square footage, bedroom and bathroom count, lot size, construction quality grade, condition. Errors in those inputs show up more than people expect. A wrong square footage or a phantom extra bathroom can inflate market value by $20,000 to $50,000 in a mid-tier market. Fixing a factual error is often faster and more reliable than arguing comparables.

Cook County publishes the property record card on the assessor's website. So do Los Angeles County and Montgomery County. Check yours before you spend a weekend on comp research.

What is the assessment ratio in my state, and does it apply to me?

Assessment ratios are set by state statute or state constitution, and many states break them down further by property class. Here are the ratios for some of the largest states, with sources:

State	Residential Assessment Ratio	Commercial Assessment Ratio	Notes
California	Purchase price + 2%/yr cap (effective ratio varies)	Same formula	Prop 13 applies to all property [3]
Texas	100% of market value	100% of market value	10% annual cap on homestead appraised value [4]
New York (NYC Class 1)	6% of market value	45% of market value (Class 4)	NYC-specific rules [5]
Illinois (Cook County residential)	10% of market value	25% of market value	Set by PTAX statutes and county ordinance [6]
Georgia	40% of fair market value	40% of fair market value	O.C.G.A. § 48-5-7 [7]
Minnesota	100% for most residential; rates vary by tier	100%	Minn. Stat. § 273.11 [8]

Georgia is a clean example. State law requires assessment at 40% of fair market value, so a $300,000 home should carry an assessed value of $120,000 ^[7]. If your Gwinnett County or Bibb County notice shows an assessed value of $138,000, the assessor thinks your home is worth $345,000. That's the number to challenge.

Minnesota assesses at 100% of estimated market value for most property, then applies a "class rate" before multiplying by the levy ^[8]. Assessed value equals market value on paper, but your real burden depends on your property class. Homestead properties in Hennepin County get a lower class rate than commercial, which acts like a lower assessment ratio in practice.

The honest answer: look up your state's statutes. The assessor's website usually publishes the ratio. If it doesn't, your state's department of revenue or department of taxation holds the authoritative figure.

Does a higher appraised value always mean a higher tax bill?

Usually yes. But the relationship isn't always straight, and there are cases where a jump in value doesn't touch your bill at all.

The mill rate isn't fixed. Each year the taxing authority sets it to raise enough revenue to cover the budget. If property values across your whole jurisdiction rise 10%, the mill rate often falls by roughly the same amount, and the average bill stays flat. Your bill goes up only if your value rose faster than the average in your district. People miss this constantly.

Exemptions reduce taxable value after the ratio is applied. A homestead exemption of $25,000 in Texas means your taxable value is $25,000 below your assessed value ^[4]. A senior freeze program can lock taxable value no matter what appraised value does.

Some states cap the annual increase in taxable value separately from assessed value. California does it structurally through Prop 13 ^[3]. Texas homesteads are capped at a 10% annual increase in appraised value ^[4]. Florida's Save Our Homes cap limits increases to 3% per year or the rate of inflation, whichever is less ^[10].

So if your appraised value jumped and you have no cap or generous exemption, your bill is going up. If you're in a capped state and you've owned for a decade, appraised value can sit well above your taxable base, and a big jump in appraised value might cost you nothing this year. Check whether a cap applies before you file.

How do you tell if your assessed value or appraised value is too high?

The most reliable test is a sales-comparison analysis, the same method appraisers use. Find three to five homes that sold in the last six to twelve months (closer is better) that are genuinely similar to yours: same neighborhood, similar square footage, same rough age, similar condition. Calculate price per square foot for each, or the total sale price adjusted for differences. If those sales support a value well below what the assessor has, you have a case.

The assessor's own data works in your favor. Pull your property record card and hunt for factual errors first: wrong square footage, a finished basement the assessor counted that doesn't exist, a pool listed that belongs to a neighbor's record. Errors are more common than people think, and they're easier to win on because there's no judgment call involved.

For comparable sales, use your county's public sale records, Zillow's sold filter, or your MLS if you have access. Stick to closed sales, not active listings. Assessors work off a valuation date (a lien date or assessment date) set by statute, so your comps need to cluster around that date, not your appeal hearing date.

A Texas Tribune investigation found that commercial properties worth over $1 million were systematically under-appraised relative to residential properties, partly because commercial owners contest assessments harder ^[9]. The lesson for homeowners: assessors do make errors that push higher values onto lower-value homes, and appealing pays.

If you want a structured way to gather comps, organize evidence, and draft a protest letter without hiring a contingency firm, TaxFightBack's appeal kit walks through the exact documents and arguments that win at the informal hearing stage.

What's the difference between appraised value, taxable value, and assessed value on my Texas notice?

Texas notices are among the most transparent (and most confusing) in the country because they show all three numbers and all three can differ.

Under Texas Property Tax Code § 23.01, all property is appraised at 100% of market value ^[4]. That's the appraised value line. For homestead-capped properties, assessed value is last year's assessed value plus 10%, if appraised value jumped by more than that. So if your home appraised at $420,000 this year but last year's assessed value was $350,000, your assessed value caps at $385,000 (350,000 x 1.10). Taxable value is then the assessed value minus any exemptions you qualify for (homestead, over-65, disabled veteran, and so on).

The number you fight at the Appraisal Review Board is the appraised value, because that's the input. Even if a cap protects you this year, a high appraised value catches up with you, and a winning protest resets a lower base for future years.

For specifics on Texas county notices, see our guide for Bexar County. For a Georgia side-by-side, see Gwinnett County.

Can your property be assessed at more than its market value?

It happens more than assessors like to admit. The IAAO standard for mass appraisal calls for a median assessment ratio within 10% of the legal ratio and a coefficient of dispersion below 15% ^[1]. When an individual parcel lands above the median, its effective ratio exceeds the legal target, and the owner overpays relative to neighbors.

The Lincoln Institute's research found that in cities with high inequality, assessment errors are not random: lower-value homes carry higher effective assessment ratios than higher-value homes in the same district ^[2]. That's not legal in any state. It's still common. The IAAO acknowledges the pattern in its Standard on Ratio Studies.

Divide your assessed value by what your home would actually sell for today. If that ratio is higher than your jurisdiction's stated ratio, you are over-assessed. File.

In New York City, assessments on small residential buildings have been documented as regressive compared to large luxury condos, because the assessment ratios for Class 1 and Class 2 interact with different market dynamics. A modest brownstone can carry a higher effective rate than a luxury condo of the same nominal price.

The system won't fix itself. You have to file.

How does the appraisal date or assessment date affect these values?

Every jurisdiction sets a "valuation date" or "lien date," and the assessor is supposed to estimate what your property was worth on that exact day. This matters a lot in fast-moving markets.

In California, the lien date is January 1 of each tax year ^[3]. In Texas, the appraisal district must appraise property as of January 1 ^[4]. In New York, taxable status dates and valuation dates vary by municipality (often January through March for most towns), with New York City set by its own charter and the Real Property Tax Law.

If the market peaked in March and your valuation date is January 1, your assessment might reflect a lower point. If the market was climbing sharply into the valuation date, the assessment can capture a high that has since corrected. Either way, the comparable sales in your appeal must cluster around the valuation date, not around your hearing date, which could land six to twelve months later.

This trips up a lot of homeowners. You file in August, the market has softened since January, and you show the assessor current Zillow estimates. The assessor (correctly) says those prices don't speak to the January 1 valuation date. Use sales from the two to four months around the valuation date. Going back as far as six months is usually accepted. Going back twelve months requires an adjustment for market conditions.

If you buy a house, does the sale price reset your assessed value?

In some states, yes. In others, no. This is one of the biggest practical differences between assessment systems.

California resets assessed value to purchase price on a change of ownership, under Prop 13 ^[3]. That's the only event that resets the base. A neighbor who bought in 1998 pays taxes on a far lower base than you do if you bought in 2023.

Texas does not automatically reset off purchase price. The appraisal district is supposed to appraise at market value regardless, but a recent purchase at market value is strong evidence that the appraised value is right. If you overpaid or bought at an unusual price (foreclosure, estate sale, family transfer), that sale price may not represent market value.

In Michigan, a sale triggers an uncapping of the assessed value in the year following the sale. Before a sale, taxable value is capped at the rate of inflation under Proposal A (1994). After the sale, taxable value resets to 50% of state equalized value, which is the assessor's market value estimate. That can produce a large tax jump for buyers of long-held properties.

In Georgia, Florida, and most Southeast states, purchase price is public record and one data point the assessor considers, but it doesn't automatically become the assessed value. The assessor still estimates market value through mass appraisal, and a recent purchase at market price is consistent evidence, not binding.

For Santa Clara County and every California county, the Prop 13 reset-on-sale rule is the single biggest reason your assessed value is what it is the year after you buy.

Does a bank appraisal or a private appraisal change your property tax assessment?

A bank appraisal is not automatically forwarded to the assessor, and a high appraisal for mortgage purposes does not trigger a reassessment. The two systems run on separate tracks.

That said, a private appraisal from a licensed appraiser is one of the strongest pieces of evidence you can bring to a property tax appeal. Unlike a grid of comparable sales pulled from Zillow, a certified appraisal is a formal professional opinion that follows USPAP (Uniform Standards of Professional Appraisal Practice), and it's harder for an assessor to wave off.

A private residential appraisal usually costs $400 to $700, sometimes more in high-cost metros. Whether it's worth it depends on the dollars at stake. If a $30,000 cut in assessed value saves you $600 a year, you recover the appraisal cost in under two years. If the cut saves you $150, the appraisal isn't cost-effective.

For most residential appeals, a tight set of three to five comparable sales wins at the informal hearing level without paying for an appraisal. Save the professional appraisal for formal hearings before a board of equalization or tax court, where you need something that survives adversarial questioning.

For commercial property in complex markets like LA County or Hennepin County, income-approach appraisals are usually necessary, and the cost-benefit math shifts.

What should you actually do if your assessed value looks wrong?

Start with the property record card, free on your county assessor's website. Check every data point: square footage, year built, bedroom and bathroom count, lot size, and any special features (pool, finished basement, fireplace). If one is wrong, request a correction in writing before you file a formal appeal. Many counties run an informal review process for factual corrections that's faster and easier than a full protest.

If the data is right but you think the market value estimate is too high, gather comparable sales. Use public records or Zillow's sold filter, limited to closed sales within six months of your valuation date, within a half-mile to a mile, with similar square footage (within 15% to 20%) and condition. Work out the price per square foot for each comp and compare it to the assessor's implied market value per square foot. If you're 10% or more above the comp range, file.

Check the deadline. Missing it by one day forfeits your rights for the year in most jurisdictions, no exceptions. Deadlines usually run 30 to 90 days after the mailing date of your assessment notice. Some states tie the deadline to a fixed calendar date no matter when you got the notice.

For homeowners who want a step-by-step framework without handing a contingency firm 30% to 50% of the savings, TaxFightBack's DIY appeal kit includes comp worksheet templates, a protest letter, and state-specific deadline tables, so you keep every dollar of the reduction.

For county-specific filing instructions, see our guides for Cook County and Gwinnett County.

Frequently asked questions

Is appraised value the same as market value for property taxes?

In most states, yes. Assessors are required to estimate market value (what a property would sell for in an arm's-length transaction), and that estimate is what they call appraised value or full cash value. The terms get used interchangeably in most tax codes. The key distinction: a tax appraised value comes from a mass appraisal model, not an in-person inspection, so it carries more error than a bank appraisal.

Can my assessed value be higher than the market value of my home?

Yes, and it's more common than most assessors admit. If your assessed value divided by your home's realistic sale price exceeds your state's legal assessment ratio, you are over-assessed. The Lincoln Institute of Land Policy found systematic over-assessment of lower-value homes in multiple major U.S. cities. Comparing your assessment to recent nearby sales is the fastest way to check.

Why is my assessed value lower than my Zillow estimate?

Several reasons are possible. You may be in a state with a fractional assessment ratio, like New York City (6% of market value for Class 1 residential) or Georgia (40% of fair market value). You may benefit from a cap like California's Prop 13. Or the assessor's mass appraisal model simply produced a lower estimate than Zillow's algorithm. A lower assessed value is almost always good for your tax bill.

Does a high sale price automatically raise my property tax assessment?

In California, yes: Prop 13 resets assessed value to purchase price on a change of ownership. In most other states, no. A high sale price is evidence the assessor can consider, but it does not automatically become the new assessed value. In Texas, the appraisal district estimates market value independently, though a recent arm's-length sale is strong supporting evidence for the price you paid.

What is the assessment ratio and how do I find mine?

The assessment ratio is the percentage of market value at which the assessor must set your assessed value. It's fixed by state statute or constitution and sometimes varies by property class. Your state's department of revenue or taxation usually publishes it. You can also divide your current assessed value by the assessor's stated market value on your notice to see the effective ratio your parcel is carrying.

If assessed value is lower than appraised value, am I paying less tax?

Not necessarily. Taxing jurisdictions adjust the mill rate to the assessment ratio. A state that assesses at 40% of market value typically runs a mill rate 2.5 times higher than a state that assesses at 100%. What actually sets your burden is the effective rate on market value. Compare that across properties and jurisdictions, not the nominal mill rate or the assessed value alone.

How does an informal bank or refinance appraisal affect my property taxes?

It doesn't, automatically. Banks and assessors run separate systems. A high mortgage appraisal is not sent to the assessor. But if your bank appraisal comes in lower than your tax assessment, that appraisal can be evidence in a tax appeal, since it reflects a professional opinion of market value from a licensed appraiser who actually inspected your property.

What is taxable value versus assessed value?

Taxable value is what's left after subtracting exemptions from assessed value. In Texas, you subtract your homestead exemption (generally $100,000 for school districts under Senate Bill 2 as of 2023), over-65 exemption, and any others from assessed value to get taxable value. The tax rate is multiplied by taxable value. Assessed value and taxable value match only if you have no exemptions.

How often is appraised value updated by the assessor?

It depends on the state. Texas law requires reappraisal of property at least once every three years, and most large districts reappraise annually [Texas Property Tax Code § 25.18]. California only reappraises on a change of ownership or new construction. Many other states reassess on a cycle of one to six years. Annual reassessments in fast-moving markets are the ones most likely to shock homeowners and prompt appeals.

What happens to assessed value if I renovate or add a room?

Permitted additions and renovations typically trigger a partial reassessment. The assessor adds value for the new improvement without resetting the base value of the rest of the property (important in Prop 13 states). Unpermitted work is riskier: if the assessor finds it during a reappraisal, they add it retroactively. Pulling a permit creates a paper trail, but it also invites assessment scrutiny.

Are commercial properties assessed at the same ratio as residential?

Rarely. Most states with classification systems apply higher assessment ratios to commercial property. Illinois assesses Cook County commercial at 25% of market value versus 10% for residential. New York City assesses Class 4 commercial property at 45% versus 6% for small residential. The logic is that businesses can deduct property taxes, so they can carry a higher nominal burden. Effective rates often still favor commercial in practice.

Can I appeal the assessment ratio itself, or only the market value estimate?

You generally cannot appeal the ratio, because state law or constitution sets it, not the assessor. What you can appeal is whether the assessor applied the ratio to a defensible market value, and whether the market value estimate itself is accurate. Most winning appeals target the market value input, not the ratio or the mill rate.

Does paying more property tax mean my assessed value is higher than my neighbor's?

Not necessarily. A higher bill can also reflect a higher mill rate (different taxing districts have different rates), fewer exemptions, or a different property class. To compare your assessment to a neighbor's, look at the assessed value per square foot on the county's public records, then check whether your ratio relative to sale prices runs higher than theirs. That comparison is exactly what assessors use to defend their work, and you can use it too.

What's the difference between a lien date and an appeal deadline?

The lien date (or valuation date) is the day the assessor values your property as of, often January 1. The appeal deadline is a separate date, usually 30 to 90 days after your notice is mailed, by which you must file a protest. Your comparable sales must match the lien date, not the appeal deadline. Missing the appeal deadline forfeits your challenge for the year in most jurisdictions.

Sources

1. International Association of Assessing Officers (IAAO), Standard on Ratio Studies: IAAO calls for the median ratio of assessed-to-sale price to fall within 10% of the jurisdiction's stated assessment level, with a coefficient of dispersion below 15% in most residential markets
2. Lincoln Institute of Land Policy, research on the regressivity of property tax assessment: Systematic regressive assessment errors documented in Chicago, Detroit, and Philadelphia, where lower-value homes carry higher effective assessment ratios
3. California State Board of Equalization, Proposition 13 overview: California Prop 13 limits annual assessed value increases to 2% and resets to purchase price on change of ownership; lien date is January 1
4. Texas Property Tax Code § 23.01 and § 23.23, Texas Comptroller of Public Accounts: Texas requires 100% market value appraisal; homestead properties capped at 10% annual increase in appraised value; valuation date is January 1
5. New York City Department of Finance, property tax rates and classes: NYC Class 1 residential properties are assessed at 6% of market value; Class 4 commercial at 45% of market value
6. Cook County Assessor's Office, assessment levels: Cook County Illinois assesses residential property at 10% of market value and commercial at 25%, per PTAX statutes and county ordinance
7. Georgia Code O.C.G.A. § 48-5-7, Georgia Department of Revenue: Georgia requires all taxable property to be assessed at 40% of fair market value
8. Minnesota Statute § 273.11, Minnesota Department of Revenue: Minnesota assesses most residential property at 100% of estimated market value with class rates applied before levy
9. The Texas Tribune, investigative reporting on property tax inequities: Commercial properties worth over $1 million were found to be systematically under-appraised relative to residential properties in Texas, partly because their owners contest assessments more aggressively
10. Florida Statute § 193.155, Florida Department of Revenue: Florida's Save Our Homes cap limits annual increases in assessed value for homestead property to 3% per year or the rate of inflation, whichever is less
11. IAAO, Standard on Mass Appraisal of Real Property: Mass appraisal uses statistical models to estimate value for thousands of properties simultaneously using sales data and property characteristics