Assessment Ratio
The percentage of a property's fair market value that is used as its taxable assessed value for property tax purposes. Ratios vary by jurisdiction and property type.
The assessment ratio is the fraction of a property's actual market value that a local government uses as the assessed value for calculating property taxes. If a jurisdiction uses an assessment ratio of 80%, a home worth $500,000 on the open market would have an assessed value of $400,000, and taxes would be calculated on that lower figure.
Assessment ratios exist because many jurisdictions do not assess property at 100% of market value — either by law or practice. Ratios can differ by property class within the same jurisdiction; for example, residential property might be assessed at 70% of value while commercial property is assessed at 100%. This complicates direct comparisons of property tax burdens across jurisdictions.
Understanding your assessment ratio helps you evaluate whether your property is fairly assessed. If the ratio in your area is 80% and your assessed value divided by a recent comparable sale price is much higher than 80%, you may have grounds to appeal. Many states publish their legally required assessment ratios, and independent studies measure actual ratios to evaluate assessment uniformity and fairness.
Related Terms
Property Tax
An annual tax levied by local governments on the assessed value of real property (land and buildings). Rates and assessment methods vary widely by jurisdiction.
Homestead Exemption
A reduction in the assessed value (or taxable value) of a primary residence for property tax purposes. Most states offer homestead exemptions to owner-occupants, reducing their annual property tax bill.
SALT Deduction
An itemized deduction for state and local taxes paid, including income tax (or sales tax) and property tax. Currently capped at $10,000 per return ($5,000 for married filing separately).