Property Taxation 101 - Laserfiche WebLink

Home Browse Search

Local tax rates Local governments do not directly set a tax rate. Instead, the tax rate is a function of the levy and the total tax base.. To compute the local tax rate, a county must determine the total tax capacity to be used for spreading the levies. Th€ total tax capacity is computed by first aggregating the tax capacities of all parcels within the city. Several adjustments to this total must be made because not all tax capacity is available for general tax purposes. The result of this calculation produces taxable tax capacity. Taxable tax capacity is used to determine the local tax rates. [city levy] / [taxable tax capacity] = [city tax rate] The city tax rate is computed by dividing the city levy (minus the fiscal disparities distribution levy, if applicable) by the taxable tax capacity. Under the current property tax system, the tax rate is expressed as a percentage. For example, the average 2008 city tax capacity rate is approximately 36.29 percent. Dramatic changes to the tax system in 2001 increased the average city rate significantly in 20Q2. This same calculation is completed for the county based on the county's levy and tax base, the school district and all special taxing authorities. The sum of the tax rates for all taxing authorities that levy against a single property produces the total local tax. rate. This total local tax rate is then used to determine the overall tax burden for each parcel of property. Parcel tax calculations The property tax bill for each parcel of property is determined by multiplying the parcel's tax capacity by the total local tax rate. The tax statement for each individual parcel itemizes the taxes for the county, municipality, school district, and any special taxing authorities. [parcel tax capacity] * [total local tax rate] = [tax capacity tax bill] To complicate the tax calculations, voter-approved referenda levies are applied to the market value of each parcel, not tax capacity. As a result, each identically valueQ parcel, regardless of the property's use, pays the same amount of referenda taxes (with the exception of certain agricultural and seasonal recreational properties, which are exempted from referenda taxes). In 2008, three counties, 50 cities and 335 school districts levied market value-based levies. These cQmmunities must have a separate calculation for a market value referenda levy by the total taxable market value of each community. [parcel market value] * [market value tax rate] = [market value tax bill] [tax capacity tax bill] + [market value tax bill] = [total tax bill] State property tax New to the tax system in 2002 was a state property tax on all commercial, industrial, seasonal recreational, and utility real property. In 2008, this new tax raised $655 million statewide; the prQceeds are deposited in the state general fund. Prior to 2002, the state last collected a property tax in 1968. Property tax credits Several tax credits for various types of properties are available in certain instances. These amounts are subtracted from the overall taxes for each parcel to determine the net tax bill for the individblal owner. Minnesota also provides additional property tax relief directly to individual homeowners, cabin owners, and renters through the circuit breaker and the targeting refund programs. 2