How are property taxes calculated?

Property taxes are paid by residential homeowners and nonresidential property owners, including farmers, ranchers, oil and gas operators, and other businesses. Property taxes are paid on a portion of a property’s actual value. The actual value of property is determined by the county assessor or state property tax administrator. The portion of the actual value on which taxes are paid is known as taxable value. Taxable value is also known as assessed value.

Taxable value is calculated by multiplying the actual value by an assessment rate. The assessment rate is currently 7.15 percent for residential properties and is fixed at 29 percent for most nonresidential properties. Mines and lands that produce oil and gas are assessed at different rates than other nonresidential property.

Taxable value is then multiplied by the tax rate, called a mill levy, to determine the property taxes owed. One mill equals $1 for each $1,000 dollars of taxable value. For example, 100 mills is equal to a tax rate of 0.1 (100/1,000), or 10 percent. The tax rate varies for each property based on the local taxing districts in which it is located. Figure 2 provides an example of how property taxes are calculated.

FAQs - Figure 2

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1. What does Amendment B do?
2. How are property taxes calculated?
3. How has the residential assessment rate changed over time?
4. What factors impact property taxes?
5. What are the automatic mill levy increases that some local governments have adopted?
6. How does Amendment B affect residential property taxpayers?
7. How does Amendment B affect nonresidential taxpayers?
8. How does Amendment B impact local government revenue?
9. How does Amendment B impact state government spending for schools?
10. If Amendment B passes, can the state legislature change the assessment rates?