You’re looking at a house in Scottsdale or maybe a quiet plot in Cochise County, and the first thing you check—after the kitchen—is the tax bill. People move to the desert for the sun, but they stay for the property tax rates in Arizona. Honestly, the numbers look weirdly low compared to places like New Jersey or Illinois. While the national average effective tax rate often hovers around 0.9% to 1.1%, Arizona frequently clocks in at a measly 0.43% to 0.51%.
But here’s the thing: Arizona doesn't calculate taxes like anyone else. If you look at a tax bill from Maricopa County, you’ll see "Primary" rates, "Secondary" rates, and something called "Limited Property Value." It’s a bit of a maze.
The Weird Math of Limited Property Value (LPV)
Most states just tax you on what your house is worth today. Arizona? Not exactly. We use two different values: Full Cash Value (FCV) and Limited Property Value (LPV).
The FCV is basically what the market thinks your home is worth. If you sold it tomorrow, that’s the number. The LPV is a "stabilized" value. By law, your LPV cannot increase by more than 5% per year, even if the housing market in Phoenix is exploding.
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This is your safety net. Because of a 2012 constitutional amendment (Proposition 117), almost all your taxes are now calculated using the LPV, not the market value. It prevents that terrifying scenario where a sudden neighborhood boom priced you out of your own home just because of the tax bill.
Primary vs. Secondary Rates
You’ll see two lines on your bill.
- Primary Tax Rate: This pays for the boring but essential stuff—government operations, general funds, and basic school maintenance.
- Secondary Tax Rate: This is the "voter-approved" stuff. If your local school district wants a new football stadium or the city needs a bond for better parks, it shows up here.
Interestingly, while the primary rate is capped in certain ways, the secondary rate depends entirely on what the people in your specific zip code voted for. This is why two identical houses three miles apart might have totally different tax bills.
A County-by-County Reality Check
It’s easy to say "Arizona is cheap," but that's a generalization. Taxes vary wildly depending on where you plant your cactus.
- Pima County (Tucson): Usually on the higher end. The effective rate often hits 0.65%. It sounds low, but compared to the rest of the state, it's a bit of a gut punch.
- Maricopa County (Phoenix/Mesa): The heavy hitter. With a median property tax around $1,800 to $2,000, it’s right in the middle. However, cities like Buckeye have higher levies (often around 1.6 per $100 of assessed value) compared to Chandler or Gilbert.
- Coconino County (Flagstaff): Often boasts some of the lowest effective rates, sometimes as low as 0.36%.
- Santa Cruz and Yuma: These border counties can sometimes surprise you with higher secondary rates to fund local infrastructure and emergency services that aren't as spread out as they are in Phoenix.
The "1% Cap" Nobody Explains Right
There is a legendary "1% Cap" in the Arizona Constitution. People think it means they will never pay more than 1% of their home's value.
Kinda, but not really.
The cap only applies to Primary Taxes for owner-occupied residential properties (Class 3). If your primary tax bill exceeds 1% of your Limited Property Value, the school district's portion gets cut, and the state has to make up the difference.
But—and this is a big "but"—Secondary Taxes (those bonds and overrides we talked about) are not part of this cap. If your neighbors keep voting for every bond measure that hits the ballot, your total tax bill can absolutely climb past that 1% mark.
Special Exemptions for 2026
Arizona actually gives a break to people who need it. If you’re a senior, a veteran, or living with a disability, you shouldn't be paying the full freight.
For the 2026 tax year, the legislature bumped the Business Personal Property Tax Exemption to $500,000. This is huge for small business owners who used to get taxed on every desk and computer in their office.
For individuals, the "Senior Valuation Freeze" is the crown jewel. If you’re over 65 and make under a certain income threshold (usually around $43,000 to $54,000 depending on the year and household size), you can "freeze" your property value. Your taxes might still go up if the rate changes, but the value they use to calculate it stays stuck in time.
Widows, Widowers, and Disability Exemptions
In 2026, the specific exemption amount is around $4,873 of assessed value.
It doesn't sound like much, but remember: we only tax a percentage of your value.
In Arizona, residential property is assessed at a 10% ratio.
So, if your home is worth $400,000 (LPV), your "Assessed Value" is only $40,000.
Subtracting that $4,873 exemption from the $40,000 makes a real dent in the final bill.
Why the "Assessment Ratio" is the Secret Sauce
If you come from California, you're used to a 1% rate on 100% of your value.
Arizona doesn't do that.
We use a "Class" system.
- Class 1 (Commercial): Being lowered to 15.5% in 2026.
- Class 2 (Vacant Land): Generally 15%.
- Class 3 (Primary Residence): 10%.
- Class 4 (Rental Property): 10%.
Basically, the state decides that businesses should pay a higher "share" of the value than a family living in a bungalow. This is why property tax rates in Arizona stay low for homeowners—the burden is shifted slightly toward commercial interests.
Common Pitfalls to Watch Out For
Don't just look at the Zestimate.
The biggest mistake new residents make is assuming the previous owner's tax bill will be their tax bill.
When a property sells, the "Limited Property Value" doesn't reset to the sales price (unlike in California with Prop 13). That’s the good news.
The bad news? If the previous owner had a "Senior Freeze" or a "Veteran Exemption," that discount vanishes the moment you close escrow.
Also, watch out for "Special Assessment Districts." If you buy a new build in a fancy master-planned community in Peoria or Surprise, you might be in a Community Facilities District (CFD). These are extra taxes used to build the roads and sewers for that specific neighborhood. It can add hundreds, sometimes thousands, to your annual bill.
Actionable Steps for Arizona Homeowners
If you want to keep your property tax rates in Arizona as low as possible, you can't just set it and forget it.
- Verify your Classification: Ensure your home is listed as "Class 3" (Owner-Occupied). If the county thinks it's a rental or a secondary home, you might miss out on the "State Aid to Education" credit, which can shave 35-40% off the school tax portion of your bill.
- Check the Deadline: If you qualify for an exemption (Senior, Disabled, Veteran), you must file the paperwork with your County Assessor between January 1 and March 1. If you miss it, you’re out of luck for the year.
- Appeal the FCV: You can't usually appeal the 5% LPV increase because it's a formula. But if the "Full Cash Value" (Market Value) on your notice is way higher than what your house is actually worth, appeal it. If the FCV drops below the LPV, your taxes go down.
- Read the Ballot: Before you vote "Yes" on that new municipal bond, check the "Tax Impact" statement. It’s required by law to tell you exactly how many dollars it will add to your specific tax bill per $100,000 of value.
Arizona is a low-tax state, but it isn't a "no-tax" state. Staying on top of your LPV and knowing which exemptions you're entitled to is the only way to make sure you aren't overpaying for your slice of the desert.
Next Steps for You
- Locate your Parcel Number (APN): You can find this on your deed or last year's tax bill.
- Visit your County Assessor’s Website: (e.g., Maricopa County Assessor or Pima County Assessor) to see if you are currently receiving the "Homeowner Rebate."
- Review the "Notice of Value": These usually arrive in February for the following tax year. Read it immediately to see if you need to file an appeal before the April deadline.