How does Alabama calculate property tax?

Alabama taxes assessed value, not market value. For owner-occupied homes (Class III) the assessed value is 10% of market value. That figure, minus any homestead exemption, is multiplied by the total county mill rate to get the annual tax.

A mill is one-tenth of a cent, so 1 mill equals 1 dollar of tax per 1,000 dollars of assessed value. Alabama county total mill rates typically run between about 30 and 70 mills depending on local school and city levies.

How much is the Alabama homestead exemption?

Owner-occupants get a state homestead exemption that reduces assessed value by 4,000 dollars for state tax and 2,000 for county tax. The estimator applies a combined exemption you can adjust; additional exemptions exist for residents over 65 or disabled.

Why is the assessment ratio only 10%?

Alabama classifies owner-occupied residential property as Class III, assessed at 10% of market value — among the lowest ratios in the country, which is a major reason Alabama property taxes are so low. Commercial property (Class II) is assessed at 20%.

How accurate is the estimate?

It is a close estimate. Actual bills depend on your exact county and municipal mill rate and any special exemptions, so confirm with your county revenue commissioner for the precise figure.

Alabama Property Tax Estimator

Alabama has the second-lowest property taxes in the United States, and the reason is built into how the tax is calculated. Unlike most states, Alabama taxes only a small fraction of your home’s value — the assessed value — and applies a mill rate to it. This estimator walks through Alabama’s actual method: the 10% residential assessment ratio, the homestead exemption for owner-occupants, and the county mill rate that turns assessed value into your annual bill.

How it works

Alabama property tax is computed in three steps:

Assessed value. Multiply market value by the assessment ratio. Owner-occupied homes are Class III, assessed at 10% of market value. (Commercial property is Class II at 20%.) A $200,000 home has an assessed value of $20,000.
Homestead exemption. Subtract the homestead exemption for owner-occupants. The state exemption reduces assessed value by up to $4,000 (state) plus $2,000 (county); the estimator lets you set a combined figure.
Apply the mill rate. Multiply the net assessed value by the total county mill rate. One mill is $1 of tax per $1,000 of assessed value, so a 50-mill rate means assessed × 0.050.

In formula form: tax = (marketValue × ratio − exemption) × millRate ÷ 1000.

Tips and example

For a $200,000 owner-occupied home in a county with a 50-mill rate and a $6,000 combined homestead exemption: assessed value is $20,000, minus $6,000 exemption gives $14,000, times 50 mills (× 0.050) equals an annual tax of about $700.

That low figure is typical for Alabama. To get your exact number, look up your county’s total millage on your revenue commissioner’s site — rates vary because they bundle state, county, city and school district levies. Residents aged 65 and older or who are disabled may qualify for larger exemptions, so check local rules to lower the estimate further.

Alabama Property Tax Estimator

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How it works

Tips and example