The FWD #B24 • 875 words

Real estate taxes account for half of all the revenue generated by localities in Virginia. It’s worth knowing how they work.

When your town fills a pothole, staffs a library, or opens a school, that money has to come from somewhere. In Virginia, more than you might expect comes from a single source: the real estate (or “real property”) tax. It’s the largest source of local government revenue in the Commonwealth, averaging just under 50% of all locally-generated revenue for cities, counties, and towns combined.

This tax touches you whether you rent or own, since it’s baked into what landlords charge and what local services can afford to do. So, we think it’s worth understanding how this system actually works. Thankfully, the mechanics are simpler than the jargon suggests.

Source: Tax Foundation, “Property Taxes by State and County, 2026“

Assessed Value × Rate = Your Bill

A property tax bill has two ingredients. The first is the tax rate, set each year by your elected local officials and usually expressed as dollars per $100 of value. In 2025, that rate ran from around $0.50 per $100 in some rural counties to nearly $1.30 in a few cities. The rate is the publicly-debated, on-the-record number. You don’t have to look hard to find it in budget hearings and campaign flyers.

The second ingredient is the assessed value: what the locality’s assessor says your property is worth. Multiply the two, and you have your bill. A home assessed at $300,000 in a locality charging $1.00 per $100 owes $3,000 a year.

While elected officials debate the rate in public, the assessed value is set quietly, property by property, by an assessor’s office. And this assessment — not the rate — decides whether two neighbors with identical homes pay the same amount.

Let’s say our $300,000 home is in a county where supervisors have decided to raise the rate five cents, to $1.05 per $100. Our bill just went up $150. Not great, not terrible. If the county keeps the same rate but reassesses our property to $350,000 to catch up with market values, our bill jumps $500. And supervisors never had to vote on it.

Virginia Requires the Assessment to Be Fair

The Constitution of Virginia requires that all property be taxed uniformly within its class, and that every assessment reflect fair market value. In other words, your assessment is supposed to match what your property would actually sell for, and what your neighbor’s should too. Nobody’s home is supposed to be valued at a different rate or method than anybody else’s.

How often localities check that value varies. Cities in Virginia generally reassess every one or two years; counties reassess anywhere from every one to six years. Between assessments, a fast-moving market can pull real values away from the numbers on the books. If you think your assessment is wrong, you have a right to challenge it — first with the assessor, then before a local board of equalization, a small panel appointed to hear exactly these complaints.

Why the Boring Step Deserves Attention

It’s tempting to treat assessment as pure paperwork — a technical estimate that either matches the market or gets quietly corrected. But because the assessed value is the base that everything else multiplies, small systematic errors don’t stay small. If a whole category of homes is valued at a higher share of its true worth than another, those owners overpay every single year, no matter how fair the published rate looks. A uniform rate applied to uneven assessments produces an uneven tax.

For affordable housing developers and operators, this has been a real problem. For a long time, local assessors often failed to recognize discounted rent revenue in affordable properties, leading to many unexpectedly high tax bills. Some providers reported spending around 100 hours each year appealing valuations just to get their buildings assessed correctly.

Thankfully — after several years of persistent advocacy — the General Assembly adopted HB2245 in 2025 to provide more direct rules assessors must follow for affordable rental properties. Providers can now use a standardized form to share relevant financial data with local officials, who will then set assessed values accordingly.

For Another Blog

The system runs on assessments. The law requires those assessments to be fair. Getting them wrong is costly. The obvious question is then: are they actually fair?

As the above affordable rental issue demonstrates, we shouldn’t always assume the answer is yes. To be sure, local assessors overwhelmingly work in good faith but have a very challenging job at the end of the day. When there are gaps in proper guidance and training, they are susceptible to the same structural biases and faults found in any other profession.

In recent years, researchers have gathered a striking amount of evidence to begin determining where, how, and why the system fails. By pulling millions of assessment and sales records across the country, including here in Virginia, they can test whether the cheapest homes and the priciest homes really are treated the same.

We’ll get deeper into what the data shows and how that has impacts on affordability in a future blog.

Learn More

• Meeting Local Needs with Fairer Local Taxes (The Commonwealth Institute)
• Taxes in Virginia compared to other states (Tax Foundation)
• Updates on Property Tax Assessments of Affordable Housing 2025 (Virginia Housing Alliance webinar)
• FWD #176: Tax Assessments and Affordable Housing — our earlier look at the assessment question