How are rates determined?
Get Legal Help Today
Secured with SHA-256 Encryption
UPDATED: Jan 29, 2010
It’s all about you. We want to help you make the right legal decisions.
We strive to help you make confident insurance and legal decisions. Finding trusted and reliable insurance quotes and legal advice should be easy. This doesn’t influence our content. Our opinions are our own.
Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.
The operations of a local taxing unit are supported through the dollars raised by property taxes. Basically the unit calculates the tax in one of two forms:
(1) it divides the figure for estimated expenditures by the taxable or assessed value of all property in its area. The result is the tax rate and may be expressed using mills or percentages or a dollar amount ($1 per $100).
(2) It estimates the amount of revenue available from property tax levied at a rate specified in an ordinance or statute. Increases or decreases in the property’s taxable or assessed value directly affect the unit’s budget.
Rate limitations are common, imposed by the state’s constitution or by statute. In a large number of states, a maximum ceiling rate is set for each class of government (e.g., school, city, county, special district).
Because homes are located in different tax districts (primarily schools and cities) total tax rates vary from one neighborhood to another. Since more than one taxing authority is calculating a tax rate for the property, many jurisdictions add all the rates together, resulting in a single tax levy called a consolidated, overall, or composite levy. For example, your property tax bill would show not only a county rate, but also a school district rate, any special district tax rates (e.g., hospital, drainage, lighting).