Why did my tax bill go up 10% and the total tax levy only went up 5% from last year?
The tax levy and proposition 2 1/2 are not parcel-specific. Some properties will always bear more of the allowed annual increases (previous year's tax levy + 2 1/2% + new growth + overrides) than other properties. Within the Town, certain neighborhoods and types of homes appreciate in value at a faster pace than others. Even in a declining market, certain properties will appreciate or maintain their value.
Does Proposition 2 1/2 mean that my annual property taxes cannot increase more than 2 1/2%?
No. Proposition 2 1/2 sets a limit on the entire tax levy for the Town. While there is a limit to the overall increase in property taxes, the revaluation program may result in increases or decreases in property taxes. Proposition 2 1/2 establishes a limit on the revenue a municipality can raise from property taxes. Proposition 2 1/2 does not limit the amount by which an individual tax bill may change from year to year.
How does Proposition 2 1/2 limit taxes?
Proposition 2 1/2 contains 2 limitations on the amount of property taxes a town can raise:
1. The property tax levy ceiling (the amount raised) can never exceed 2 1/2% of the full cash value of all taxable property in the town.
2. The tax rate can never be higher than $25 per thousand of valuation.
What is the relationship of property values and the tax rate?
Proposition 2 1/2 sets the maximum amount of property taxes (or the levy) that a town can raise. Once the amount to be raised is determined, a tax rate is calculated by dividing the amount to be raised (tax levy) by the total valuation of the town. Whether the tax rate for a community will increase or decrease from the prior year will depend on the change in the tax levy voted by the community and the change in property values.