Should You Prepay Your Property Taxes Before January 1?

President Trump signed sweeping tax legislation in 2017 that capped property taxes and other state and local taxes (SALT) deductions at $10,000. This change went into effect in January 2018, which impacted 2018 taxes that were filed in April 2019, and continues to impact taxes today. The SALT deduction became a major worry for many homeowners in high-tax states. To lessen the impact, some homeowners can prepay property taxes for the next calendar year before the end of this year in order to deduct them from their current tax bill. Let’s take a look at the tax advantages of paying your taxes before January 1.

Consider working with a financial advisor to help you manage your finances and create a tax plan that works for your situation.

What to Know About Prepaying Your Property Taxes

First things first, if you take the standard tax deduction, this doesn’t affect you. Only those who itemize their tax deductions need to worry about this change, which is about 30% of taxpayers, according to the Tax Foundation. Second, this change mainly impacts those who earn over $100,000 and have high-value properties in areas with high property taxes such as New Jersey, New York, Illinois, Connecticut and California. If your property tax bill is nowhere near $10,000 each year, you likely don’t have to worry about this change.

However, homeowners who did fit into the categories above could have saved thousands by prepaying their property taxes for 2018 before December 31, 2017. This was because the SALT deduction allowed property owners to deduct an unlimited amount of property taxes.

You should note that you can only deduct property taxes on federal tax returns when you have an official bill from the tax assessor for the following year. This means a taxpayer can claim a deduction for 2023 taxes on their 2022 tax return (due on April 17, 2023), as long as they got the tax bill and paid it before December 31, 2022.

What Has the IRS Said About Early Payment

For the Trump tax change, the IRS issued an advisory statement on December 27, 2017, in response to inquiries about prepayment, saying:

“Whether a taxpayer is allowed a deduction for the prepayment of state or local real property taxes in 2017 depends on whether the taxpayer made the payment in 2017 and the real property taxes are assessed prior to 2018. A prepayment of anticipated real property taxes that have not been assessed prior to 2018 is not deductible in 2017.”

This means that if your state or local county’s assessment schedule doesn’t align, you won’t be allowed to deduct the payment on your taxes for the current year.

Keep in mind that each state treats taxes differently, so it’s worth checking with your local government. For example, in New York, Governor Cuomo signed an executive order that allows local governments to levy taxes ahead of schedule. How the IRS will treat these situations has not yet been determined, so it’s not clear whether state laws will supersede IRS guidelines.

How to Prepay Property Taxes

Prepaying property taxes isn’t as simple as sending a check early. Local tax authorities set their own deadlines, eligibility rules and payment processes, so the first step is confirming that your county or municipality accepts prepayments at all. Some areas allow partial prepayments while others only accept the full upcoming bill. Contact your local tax assessor’s office or review its website to understand timing, documentation and payment options before moving forward.

Even if your local government lets you prepay, the IRS only allows the deduction if the tax has been assessed, meaning your local authority has formally determined the amount you owe. If the assessment hasn’t been issued yet, a prepayment may not be deductible for federal tax purposes. Reviewing IRS guidance or consulting a tax professional can help ensure the payment aligns with current tax law and supports your year-end planning goals.

Once you confirm eligibility, collect your most recent property tax bill, parcel number and any required forms. Many counties require homeowners to reference the correct tax year and property information to apply payments accurately. Being prepared helps avoid delays, misapplied funds or paperwork requests that could push the payment past the deadline.

Counties typically offer multiple payment methods such as online portals, mailed checks or in-person office visits. Double-check accepted payment types and processing times, especially if you’re mailing a payment near year-end. Include any required forms or notes specifying the tax year, and keep a dated receipt or confirmation for your records in case you need proof of timely payment for tax filing purposes.

Who Can’t Prepay Property Taxes?

You might have trouble prepaying your property taxes if you generally pay through an escrow account. This means that your bank withholds money for taxes and insurance usually by sending you your mortgage bill with both charges added on top.

That surplus money sits in your escrow account until property taxes or insurance payments come due and your bank cuts the check. If you try to get ahead by paying your county early for next year, your records and the bank’s won’t match and you may be subject to an IRS audit. An audit isn’t the end of the world, but it does take time and you’ll need all your supporting documents.

You also can’t prepay if you’re subject to the alternative minimum tax. As like we discussed above, if your county hasn’t assessed your property for taxes for the current year, you can’t pay early based on an estimate.

Your county also might not accept prepayment. Property taxes differ from state to state and county to county and are administered at the local level. That means different laws and jurisdictions for each area in the U.S. What you might be able to do for your property isn’t the same as a family member across the U.S. You’ll have to check with your local tax assessment and finance office to be certain.

Finally, if you don’t itemize your tax deductions, there’s no reason to prepay because you won’t see any benefit come tax time as you’ll just end up taking a standard deduction.

Bottom Line

You might be able to save money this tax season by taking advantage of prepayment. However, your county has to have assessed your property before the end of the tax year for you to be able to claim it. Also, you should note that states treat taxes differently. So in some places, prepaying your property taxes may not have any benefit, and at worst, you might give your local government an early payment for no reason. That means paying money that could be earning interest for you in a savings account or other investment.

Tips to Help You Survive Tax Season

A financial advisor can help optimize your tax strategy for your financial goals. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Not sure what you’ll owe come tax time? Plug your information into our income tax calculator. You can find the exact breakdown of what you owe for federal income taxes.
When the tax code changes, it’s a good idea to use a good tax filing service. We did our annual roundup of the best tax filing software so that you can get through this tax season as painlessly as possible.