Why Did My Property Taxes Go Up in 2023?

Property taxes serve as a primary funding source for local governments, enabling essential services like public education, safety, and infrastructure. An increase in one’s property tax bill can prompt questions about its underlying causes. Understanding the various factors that contribute to these adjustments is important for homeowners.

Understanding Property Valuation

A significant driver of property tax increases stems from changes in a property’s assessed value. Local government agencies, often through an assessor’s office, determine this value. Assessed value is the dollar amount assigned to a property. This assessment considers comparable home sales, location, overall condition, and features like square footage.

Assessors use methods like the sales comparison approach or the cost approach. Market trends, including rising home prices and increased demand, directly influence these valuations. If a neighborhood experiences a competitive housing market, individual property assessments will likely reflect this appreciation.

Local jurisdictions operate on reassessment cycles. These cycles can vary widely, from annual reassessments to those occurring every two to six years. When a property undergoes reassessment, particularly after significant market growth, its assessed value may increase substantially. This leads to a higher tax bill even if the tax rate remains unchanged. Improvements made to a home, such as additions or significant renovations, can also trigger a reassessment and raise its assessed value.

Impact of Local Budgets and Tax Rates

Beyond property valuation, changes in local government budgets and tax rates play a direct role in property tax adjustments. Local government entities, including municipalities, counties, and school districts, establish annual budgets to fund services. These services include public schools, police and fire departments, emergency medical services, road maintenance, and public parks. Property taxes are a major source of revenue for these local services.

When the cost of providing public services increases, or if other revenue streams decline, local governments may adjust the property tax rate to meet financial obligations. The property tax rate is determined by dividing the total revenue a taxing unit needs from property taxes by the total taxable assessed value within its jurisdiction. An increase in the tax rate directly translates to a higher property tax bill.

It is important to differentiate between an increase driven by a rise in assessed property value and one caused by an increase in the tax rate. While rising values mean a property owner pays more on the same tax rate, an increased tax rate means paying more even if the property’s value remains constant. Local officials make decisions regarding these budgets and tax rates, which directly impact the tax burden on property owners. These budgetary decisions are often subject to public hearings, where residents can voice opinions on proposed spending and tax rates.

Influence of Public Referendums and Special Assessments

Property tax increases can also result from voter-approved public referendums. These measures secure funding for specific projects or needs beyond a government’s regular operating budget. Examples include new schools, infrastructure improvements like roads or bridges, or the expansion of emergency services.

If voters approve these referendums, the additional funding is often collected through an increase in property taxes. These voter-approved increases are distinct from general budget adjustments, as they are designated for particular initiatives.

Another contributing factor can be special assessments. Unlike general property taxes, special assessments are charges levied against properties that directly benefit from a specific improvement. For instance, if new sidewalks are installed or a new sewer line is extended, benefiting properties may incur a special assessment. These assessments are typically added to a property owner’s tax bill and are collected over a pre-set number of years. They are based on the benefit received from the specific improvement, not the property’s overall assessed value.

Changes in Exemptions and Credits

Adjustments to property tax exemptions and credits can also lead to an increased tax bill. Exemptions reduce the taxable portion of a property’s value. Common types include homestead exemptions for primary residences, and exemptions for senior citizens, veterans, or individuals with disabilities. These programs provide tax relief for qualifying property owners.

A homeowner’s tax bill can increase if their eligibility for an existing exemption changes or expires. For example, if a senior citizen no longer meets age or income requirements or a property ceases to be a primary residence, the previously exempted portion of the value becomes fully taxable. Changes in the amount of an exemption, such as a reduction in the flat dollar amount or percentage of value that can be excluded, would also result in a higher taxable value.

Property tax credits, while less common than exemptions, can also reduce the final tax amount due. If a credit is reduced or eliminated, the homeowner would pay more. These changes can significantly impact an individual homeowner’s tax liability. Property owners should regularly verify their eligibility for any applicable exemptions or credits with their local tax assessor’s office.