Near the bottom of most Annapolis listing sheets there's a line for annual property taxes. It's a single dollar figure that looks like a fixed cost of the house. It's actually the record of one owner's history. It reflects the seller's assessment, the seller's Homestead credit and the seller's side of the city line. A buyer inherits only the last of those three.
The city line matters more than most buyers expect. "Annapolis, MD" is a mailing address that reaches well past the incorporated City of Annapolis. Inside the city, homes are taxed by two local governments under two different rules for how fast the bill can rise. Outside the city, in unincorporated Anne Arundel County, they answer to one. Two houses with the same ZIP code and similar list prices can carry tax bills with different starting points and different speed limits.
Why the seller's number stops applying at closing
Start with the Homestead Tax Credit. The Maryland Department of Assessments and Taxation describes it as a cap on how much a principal residence's taxable assessment can rise each year. Every county and municipality has to set that cap at 10% or less. The credit doesn't lower the market value the state assigns to a home. It removes tax on the part of each year's increase that goes over the cap.
Over a long stretch of rising values, that gap can add up. An owner who has held a home for years may be paying tax on a capped figure well below the phased-in assessment SDAT has on file.
The credit belongs to the owner, though, and it doesn't follow the house. SDAT's published conditions grant the credit only when the property "was not transferred to new ownership" during the previous tax year. It also has to be the owner's principal residence, occupied at least six months of the year, including July 1 of the year the credit applies. After a sale, the new owner's taxes are figured on the phased-in assessment, not the seller's capped figure. The exact bill where that shows up depends on when the transfer falls in the tax year.
That's the general rule everywhere in Maryland. The city line changes how much it matters.
Two caps on one bill
Here are the FY2027 real property tax rates, covering July 1, 2026 through June 30, 2027, as Anne Arundel County publishes them.
| Per $100 of assessment | County rate | State rate | City rate | Total |
|---|---|---|---|---|
| Unincorporated Anne Arundel County | $0.968 | $0.112 | none | $1.080 |
| City of Annapolis | $0.577 | $0.112 | $0.738 | $1.427 |
The county charges in-city homes a reduced rate of $0.577 instead of $0.968. Even with that reduction, the combined in-city rate is $0.347 per $100 higher. On a $500,000 assessment, that's $7,135 a year inside the city and $5,400 outside it, a difference of $1,735.
The rate is only half of what the city line changes. The county's FY2027 tax information for City of Annapolis properties states that Anne Arundel County set its Homestead limit at 2%, "In the City of Annapolis, the limit is set at 10%, which applies to taxes levied by the City of Annapolis."
Put those two rules together. Outside the city, $0.968 of the $1.080 rate, close to 90%, is county tax with a 2% annual cap on taxable assessment growth. Inside the city, the county's $0.577 is about 40% of the $1.427 rate. The largest single piece, the city's $0.738, carries a cap five times looser. Once a buyer qualifies for the credit, the in-city bill starts higher, and more of it can follow rising assessments.
The timing comes from the assessment cycle. SDAT revalues one-third of the county each year and phases any increase in over three years. The county's FY2027 materials list its three assessment areas as reassessed for January 1, 2027, 2028 and 2029. A phased-in increase hits a city levy capped at 10% very differently from a county levy capped at 2%.
The fees mostly cancel, and the city's are rising
The fees separate the two sides of the line less than the tax rates do. Here are the FY2027 figures.
- Trash. The City of Annapolis FY2027 fee schedule sets residential trash collection at $463.72 a year, or $115.93 a quarter. Anne Arundel County charges $469 a year for each property on county curbside collection. The difference is about five dollars.
- Stormwater. The county's Watershed Protection and Restoration Fee is $98.40 for an improved detached single-family home zoned R1, R2 or R5. It's $196.80 for RA and RLD detached homes and $39.36 for R10, R15 and R22 residential properties. The county bills it as its own line on the property tax bill. The city's stormwater rate study schedules a single-family residential charge of $39.71 a quarter starting July 1, 2026, or $158.84 a year.
- Water and sewer. The city's adopted fee schedule includes its own water and sewer charges, with fixed meter charges plus usage-based rates.
For a typical detached home, the fees narrow the gap only a little, and that's not the main point about them. Trash, stormwater, water and sewer are city enterprise funds. The city's FY2027 Finance Committee report, dated May 11, 2026, puts the refuse rate up 7.5% in FY2027 after a 10% increase in FY2026. It puts the watershed restoration rate up 15% in FY2027 after 15% the year before.
This year's budgets left the rates alone and moved the fees
The FY2027 budget season shows the pattern clearly. Mayor Jared Littmann introduced his budget on April 13, 2026, with no increase in the property tax rate. In The Baltimore Banner's coverage two days later, Alderman Harry Huntley called the proposal reasonable and Alderwoman Karma O'Neill said she saw no red flags. The paper also noted the proposed increases to trash and water and sewer fees.
The City Council adopted Ordinance 8-26 on June 8, 2026, by a vote of nine ayes. That kept the city rate at $0.738. Three days later, on June 11, the Anne Arundel County Council passed the county's FY2027 budget unanimously, lowering the county rate from $0.977 to $0.968.
So in FY2027, the tax rate on the county side of the line went down. On the city side, the rate held steady while the service charges went up.
Reading a listing with all of this in mind
Here's a practical sequence for a buyer comparing two Annapolis-addressed homes.
- Confirm which side of the line the home is on. Anne Arundel County notes that City of Annapolis property taxes appear as a separate line on the bill for a property inside city limits. If the seller's bill has a City of Annapolis levy, the home is in the city. A ZIP code won't tell you this.
- Check whether a Homestead credit is being applied. The county directs owners to SDAT's Real Property database, where the Homestead status appears at the bottom of each property's assessment record. A long-held home with an active credit is the one where the listed tax figure is most likely to understate yours.
- Recalculate at the phased-in assessment. Multiply the full phased-in assessment by $1.080 or $1.427 per $100, depending on the side of the line. Then add the trash and stormwater figures above, plus city water and sewer if the home is in the city.
- Note when the area is next reassessed. A reassessment dated January 1, 2027, 2028 or 2029 shapes the first few bills a new owner pays. The Homestead cap that eventually applies to them is either 2% on most of the bill or 10% on most of it.
Questions buyers ask about the city line
Does a new owner have to apply for the Homestead credit? Yes, once. SDAT says new owners are mailed an application after the deed is recorded and ownership records are updated. The county's FY2027 guidance says applications must be in by December 31 to be eligible for the credit starting the following July 1. Anyone who closed on a principal residence this year is about two months from that date.
Can I pay the tax bill in two installments? The county allows semiannual payments on a principal residence. Half is due September 30 and the rest December 31, and the second payment carries a 0.87% service charge. Owners who escrow but want to pay annually have to tell their lender by May 1.
Is there separate relief based on income? The Homeowners' Property Tax Credit, run by SDAT with an Anne Arundel County supplement, is based on household income. The county suggests households with combined gross income below $60,000 consider it.
This post is general information about published rates and rules, not legal, tax or financial advice. Please confirm how any of it applies to your property with SDAT, your lender or a tax professional.
When we tour Annapolis-addressed homes with buyers, we pull the seller's tax record and check which side of the city line the property sits on before anyone writes an offer. Then we rebuild the monthly payment from the assessment, not from the listing's tax line. If you're weighing homes on both sides of the line, The ORSO. Team at David Orso can walk through those numbers with you. Contact Us.
