Understanding Your Property Tax Rate

When tax bills are sent to property owners many people don’t understand exactly what they are paying. Property taxes are a main source for municipalities to generate income that supports the major services provided to communities. Many taxpayers are not aware what the tax rate for their local municipality actually is. The mill levy is really what tax rate is levied on a given property value. One mill represents one-tenth of one cent which equates to $1 for every $1,000 of assessed property value.

The tax rate is comprised of 4 important components that help municipalities set their budget for the fiscal year. These are town, county, schools, and state education; for example community services such as emergency services, transportation, libraries, parks, and recreational events are funded from property taxes. So, if the tax rate is $28.50 for a town and the fair market value for a piece of real estate is $500,000, then the annual tax liability would be $14,250.

Many towns have budgets set to ensure there is enough funding to build a new school, add employment to the police force, buy new equipment for snow removal, and purchase supplies for community events. Depending on the needs for a given town, certain components of the tax rate will fluctuate up or down; which causes the taxpayers to see their real estate taxes change. Many towns are aware that taxpayers have the right to file a tax abatement; and if feasible a tax abatement budget is set aside. Some states have fewer opportunities to generate income from certain taxes like sales and income; and they rely heavily on property taxes to make up the difference. This affects property owners by having to pay more than their neighboring states for the same type of property. Please see below what a typical tax rate would be comprised based on the information discussed above:

Town: $11.05

County: $1.95

Schools: $13.05

State Education: $2.45

Total: $28.50

Allobar Strategies, a property tax consulting firm that assists taxpayers with filing tax abatements and understanding their property taxes, can also help tax payers in understanding why certain tax rate increases have occurred in the town where they reside.

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