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property tax

Property tax is a type of charge or exaction levied by a government’s authority. Often, taxes are classified as either specific or ad valorem . Specific taxes are of a fixed amount based on a number, or standard of weight or measurement. Ad valorem taxes are based on a fixed proportion of the value of the property with respect to which the tax is assessed. They require an appraisal of the taxable subject matters worth. General property taxes are almost invariably of this second type: ad valorem. This type of property taxes are based on ownership of the property and are payable regardless of whether the property is used or generates income for the owner (although these factors may affect the property’s assessed value).

Income tax  meets the broadest definition of a property tax. The term, however, is often limited to taxes based on real property . The most frequent use of property taxes in the U.S. is by municipal governments, authorized to generate necessary revenue in this fashion under state law. 

[Last reviewed in March of 2026 by the Wex Definitions Team
] 

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