Property Taxes in Annapolis: The Three-Layer System, Explained

Three Governments, One Bill

Every property in Annapolis is taxed by three separate governments, layered on top of one another: the State of Maryland (a statewide property tax rate that funds state programs, including debt service), Anne Arundel County (a countywide rate funding county government, schools, and county-level services), and the City of Annapolis itself (a municipal rate funding city government, police, public works, and other city-specific services). This three-layer structure is a genuinely different system than a state where property tax is set at a single county or municipal level -- an unincorporated Anne Arundel County resident pays only state-plus-county, while an incorporated-city resident like an Annapolis owner pays all three.

For fiscal year 2026 (July 2025 through June 2026), the confirmed individual rates are: Maryland state property tax $0.112 per $100 of assessed value; Anne Arundel County property tax $0.977 per $100; and City of Annapolis municipal property tax $0.738 per $100, unchanged from the prior fiscal year per the City's own reporting.

The Combined Rate: A Real Gap in This Research

Simple arithmetic on the three confirmed individual rates -- $0.112 plus $0.977 plus $0.738 -- produces a combined total of roughly $1.827 per $100 of assessed value. But a separate research pass surfaced a lower combined figure, closer to $1.433 per $100, specifically for properties within the City of Annapolis. This page cannot fully reconcile that roughly $0.40-per-$100 gap from a primary source, because direct access to Anne Arundel County's own current-tax-rates page was blocked in this research environment and the underlying mechanism could only be inferred rather than confirmed.

The most plausible explanation, based on how Maryland's county-municipal tax system generally works, is a municipal tax-rate differential (sometimes called a tax "set-off"): Maryland counties commonly apply a reduced county property tax rate to residents of an incorporated municipality, to account for services -- public works, planning and zoning, and in Annapolis's case, its own police department -- that the city itself provides directly instead of the county providing them. This is a real, documented practice used across multiple Maryland counties, not a guess invented for this page, but this page did not independently confirm the specific differential rate that applies to Annapolis parcels from a primary Anne Arundel County source. Confirm the exact current combined rate for a specific parcel directly with Anne Arundel County Finance or the City of Annapolis Bureau of Revenue and Taxation before budgeting a number.

The Homestead Tax Credit: Two Different Caps on the Same Property

Maryland's Homestead Property Tax Credit is the state's assessment-increase cap for owner-occupied principal residences -- it doesn't cap the market value used for future sales, and it doesn't reduce a tax bill outright; it limits how fast the *taxable* portion of an assessment can rise in a given year, protecting an owner from a sudden multi-year reassessment jump landing all at once on one year's bill. The state sets a maximum allowable cap of 10% a year, but individual counties and municipalities can set their own lower cap.

In Annapolis, this produces a genuinely two-tiered result on the same property: Anne Arundel County has set its own cap at 2%, one of the most protective assessment caps anywhere in Maryland, meaning the county-level portion of an eligible owner's bill can rise no more than 2% a year regardless of how much the underlying assessment increased. The City of Annapolis, by contrast, has kept its own cap at the state maximum of 10% rather than lowering it further, meaning the city-level portion of the same bill is shielded only above a 10% annual increase. A homeowner benefiting from the county's 2% cap should not assume the same protection automatically extends to the city portion of their bill -- it doesn't, at a materially different threshold.

This credit requires a one-time application through the Maryland State Department of Assessments and Taxation, per legislation enacted in 2007, and applies only to an owner-occupied principal residence -- not a second home, a vacation property, or a rental investment, which matters in a market like Annapolis where a meaningful share of buyers are not purchasing a full-time primary residence.

A Separate, Income-Based Program: The Homeowners' Property Tax Credit

Maryland also runs a separate program, commonly called the Homeowners' Property Tax Credit or "circuit breaker" credit, that is entirely distinct from the Homestead credit described above -- it isn't an assessment-growth cap, it's a direct credit tied to household income and net worth. Research for this page found eligibility criteria describing a net-worth limit of $200,000 and a combined gross household income limit of $60,000, but this page did not verify those specific thresholds against a current-year primary source with the confidence needed to state them as this year's settled figures -- income-based relief-program thresholds are exactly the kind of number that changes periodically and shouldn't be treated as permanently fixed. Confirm current eligibility and thresholds directly with the Maryland State Department of Assessments and Taxation before assuming or ruling out eligibility.

Anne Arundel County's Specific Role

Anne Arundel County functions as the middle layer of Annapolis's three-part tax structure and, separately, as the county-level government providing schools (through Anne Arundel County Public Schools, which serves Annapolis students), broader county services, and the countywide assessment infrastructure that ultimately feeds into the Maryland State Department of Assessments and Taxation's valuations. The county's own recordation tax ($7.00 per $1,000, rounded up to the nearest $500) and transfer tax (a combined 1.5% -- 1% county plus 0.5% state, with a first-time-Maryland-homebuyer exemption on half the state portion) apply at closing, distinct from the recurring annual property tax bill discussed above. Anne Arundel County, as county seat, headquarters much of the administrative machinery -- including Anne Arundel County Public Schools, based at 2644 Riva Road in Annapolis itself -- that an Annapolis property owner interacts with regardless of which specific city neighborhood they're in.

What a Buyer Should Actually Do

Before making an offer on any Annapolis property, pull the parcel's current assessed value and most recent tax bill directly from Anne Arundel County Finance or the City of Annapolis (not from a real estate listing site, which may show a stale or estimated figure), specifically ask what the current combined state-county-city rate works out to for that parcel given the differential question this page couldn't fully resolve, and confirm whether the property would qualify for the Homestead credit as an owner-occupied principal residence versus a second home or investment purchase, since the tax exposure differs meaningfully between those two scenarios.

This page does not state a property tax proration formula for a mid-year closing, nor does it independently verify current eligibility thresholds for the separate income-based Homeowners' Property Tax Credit program. A local Maryland real estate attorney or title company and an Annapolis-focused buyer's agent are the right sources for current, address-specific numbers.