valuation

homestead exemption

A homestead exemption is a property tax benefit that reduces the taxable assessed value of an owner's primary residence, lowering the annual property tax bill. Eligibility usually requires that the owner occupy the home as a principal residence, and some states offer larger exemptions for seniors, veterans, or people with disabilities. The amount, application process, and deadlines vary by state and locality.

Exam tip
Subtract the exemption from assessed value before applying the tax rate. Don't confuse it with homestead protection from creditors.
Example
A home assessed at $250,000 with a $25,000 homestead exemption is taxed on $225,000.

Related terms & state variants

Sources

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Last verified: 2026-10-23