Maryland property values are up on average by 12.7%, according to state tax officials, another year of double-digit growth that will lead to higher tax bills for many homeowners.

But that growth is slower than during the last three years, where property values increased, on average, more than 20% over each assessment cycle. It’s a sign, some say, that Maryland real estate may finally be cooling off after years of being supercharged by the COVID-19 pandemic.

The jump in assessed values applies to both residential and commercial properties in all of Maryland’s 24 jurisdictions. Here’s what you need to know ahead of receiving your next tax bill.

Why is my property value changing?

Property taxes make up a significant portion of local government revenues. Though they tend to be unpopular with homeowners for obvious reasons, economists and government officials say they’re a consistent and steady source of money that localities can use to pay for essential services.

(Besides, as Baltimore is learning, property tax cuts can mean higher fees tacked on elsewhere).

Homes and commercial buildings in Maryland are reassessed for tax purposes every three years. This year, “Group 2″ was reassessed, which comprises just under 790,000 properties. Overall, more than 92% of the properties in this group increased in taxable value, according to state tax officials.

Properties are assessed based on the outcome of more than 57,000 properties within the group sold since 2022. The last time this group was assessed, values jumped by 20.6% on average.

This year’s increase represents a 13.2% jump for residential properties and 11% for all commercial properties.

This is the eighth consecutive year that all counties experienced an increase in both residential and commercial property tax values. And it’s the fifth straight year that home and property values have increased by an average of more than 10%.

Maryland Department of Assessments and Taxation director Bob Yeager said this year’s pace of growth is more sustainable for Maryland, where as much as 68% of households are homeowners.

“After the rapid increases seen during the post-COVID recovery, this moderation is an important step toward balancing household wealth growth with housing affordability,” he said in a Tuesday statement.

How will this change my bill?

A steep change to your property tax assessment doesn’t mean your tax bill will go up by that same amount.

Increases in assessed values are phased in equally over the next three years, while decreases are implemented during this tax year.

For example: Let’s suppose you own a house that was last assessed for tax purposes at $100,000. Currently, your tax bill is calculated using your local government’s tax rate multiplied by the amount of the assessment.

Say that your assessment has increased to $112,000 this cycle. That does not equate to additional taxes on that $12,000.

Instead, your assessment will be phased in equally over the next three years ($104,000 in year one, $108,000 in year two, and $112,000 in year three).

There are also exceptions to this: The Homestead Tax Credit prevents taxpayers from paying property taxes on assessment increases above 10%. Counties also set local caps.

If your last assessment was for $100,000, for instance, and now it’s $160,000, the tax credit automatically caps the yearly increase at 10%. That means the most you’re paying taxes on the first year is $110,000 and you would receive a credit for the taxes due on the remaining $10,000 you owe that year.

Montgomery County caps its assessment increase at 10%. Carroll, Harford and Howard counties’ caps are at 5%, while Baltimore City and County are at 4%. The Anne Arundel County cap is set at 2%, with the exception of Annapolis, at 10%. The cap is set at 0% in Worcester and Talbot counties.

Where are property values rising the most?

The Maryland jurisdictions that experienced the largest spike in combined residential and commercial property values were Washington (19.5%), Talbot (18.4%), Frederick (16.6%) and Wicomico (16.1%) counties.

Residential values increased the most in Washington (22.8%), Talbot (18.2%), Wicomico (17.7%) and Howard (16.8%) counties. Commercial values experienced the most growth in Talbot (21.9%), Frederick (18%), Cecil (14.5%) and Anne Arundel (13.1%) counties.

The increases could reflect higher demand for housing and real estate in those areas or an increase in home renovations completed as more people hunker down in a tough housing economy. It may also indicate higher premiums on available land.

Washington County stands out as a “spillover” option as neighboring Frederick becomes more expensive, said Denise Lewis, president of Maryland Realtors. Second-home demand for Talbot County’s waterfront and marinas is also contributing to the growth there.

In a statement, Lewis also noted that homeowners around the state are building equity without the “runaway” tax bills of the last few years. This gives buyers negotiating power, she said, as market conditions normalize.

Marylanders are experiencing anxiety over the heightened cost of living, especially as it pertains to their home and energy bills. Legislative efforts to incentivize more housing and bring costs down have been difficult to pass over the last few years, even though state residents consistently tell pollsters that they support housing affordability measures.

What relief is available to me?

Homeowners in their primary residences are eligible for the Homestead Tax Credit, which requires a one-time application. There are no income eligibility requirements.

The Homeowner’s Property Tax Credit, meanwhile, is income-based and is meant to help low-income households from getting behind on their bills. Homeowners are required to submit an annual application to maintain eligibility.

Gov. Wes Moore’s administration has added more funding to this program, equaling payments to homeowners over the last three budget years of $48.6 million, $62.4 million and $63.9 million in the fiscal year that ended in June.

Property owners have 45 days from the date on their notice to appeal their assessment, whether they believe it’s too high or too low. The appeals process can involve numerous steps, including an informal review with a supervisor, a hearing with an independent advisory board and, ultimately, tax court. Appeals may be filed online.

This story has been updated to correct the assessment increase percentage cap for Baltimore County.