How Much of Your Property Taxes Are Tax Deductible?

Property taxes can be a big expense. But the good news—some of them are tax-deductible. This can lower the amount you owe to the IRS. But how much can you deduct? Let’s break it down.

What Are Property Taxes?

Property taxes are fees you pay to your local government. They help fund schools, roads, and other public services. If you own a home, you likely pay property taxes each year. The amount depends on your home’s value and the tax rate in your area.

Are Property Taxes Tax Deductible?

Yes, but there are limits. The IRS allows you to deduct some property taxes from your federal income tax. But you must meet certain rules.

The Tax Cuts and Jobs Act (TCJA) of 2017 changed the rules. Before, homeowners could deduct all state and local taxes (SALT). Now, there is a $10,000 limit on SALT deductions. This includes property taxes, state income taxes, and sales taxes.

For example:

  • If your property taxes are $8,000 and state income taxes are $5,000, you can only deduct up to $10,000, not the full $13,000.

What Property Taxes Qualify for Deduction?

You can deduct real estate taxes on your primary home and a second home. The IRS allows deductions for:

  • Taxes paid to state and local governments

  • Special assessments for general public services (like road maintenance)

You cannot deduct:

  • Taxes on rental properties (these are deducted as business expenses)

  • Payments for services (like trash collection)

  • Taxes paid on properties you don’t own

How to Claim a Property Tax Deduction

To deduct property taxes, you must itemize your deductions. This means listing all eligible expenses instead of taking the standard deduction.

Steps:

  1. Check your tax bill – Find out how much you paid in property taxes.

  2. Use Schedule A – This is part of Form 1040, where you report deductions.

  3. Keep records – Save receipts and tax bills in case of an IRS audit.

Who Benefits Most from This Deduction?

Not all homeowners benefit from itemizing. In 2021, about 87% of taxpayers took the standard deduction instead of itemizing (IRS Data). If your total deductions are less than the standard deduction, you won’t save money by itemizing.

Standard Deduction (2024):

  • Single Filers: $14,600

  • Married (Joint): $29,200

  • Head of Household: $21,900

If your itemized deductions (including property taxes) are lower than these amounts, the standard deduction may be better for you.

Final Thoughts

Property taxes can be tax-deductible—but only up to $10,000. If you live in a high-tax state, this cap might limit your savings. Always check your tax situation and consider itemizing if it helps you save.

For more details, visit the IRS website (irs.gov). If unsure, talk to a tax expert.