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Major State Aids & Taxes: Property Tax Descriptions

Market Value Agricultural Credit

For agricultural homestead property with a taxable market value of $115,000 or less, the credit is equal to 0.3 percent of the taxable market value of the property. For agricultural homestead property with a value between $115,000 and $345,000, the credit is equal to $345 minus 0.05 percent of the value over $115,000. For property with a value over $345,000, the credit is equal to $230. This credit does not apply to the value of the house, garage, and surrounding one acre of agricultural homestead property.

Beginning with aids payable in 2015, the market value agricultural credit was 0.3 percent of the first $115,000 of market value, plus 0.1 percent of the market value over $115,000, subject to a maximum credit of $490 per agricultural homestead.

Miscellaneous Property Tax Credits

The property tax credits included in this group are the taconite homestead credit, disparity reduction credit, power line credit, agricultural preserves credit, county conservation credit, state disaster credit, and the local option disaster credit.

Property Tax Values, Levies, and Tax Rates

Market Value is the price that a property would likely sell for on the open market.

Market Value Exclusion in this report refers to the homestead market value exclusion. For most homestead properties, market value minus the homestead market value exclusion equals the taxable market value of the property.

Net tax capacity (NTC) is derived by multiplying class rates by taxable market value and is the tax base used for levies other than most referendum levies.

Referendum market value (RMV) is the total market value excluding the value of agricultural and seasonal-recreational property, and is the tax base used for referendum levies and city and county facility projects approved through a referendum. NTC, not RMV, is used for all school building projects.

Net tax capacity levy is the property tax levy applied to net tax capacity tax base. This amount does take into account Disparity Reduction Aid, but does not include the portion of the levy that comes from Fiscal Disparities.

Referendum market value levy is the property tax levy applied to the referendum market value tax base. This amount does take into account Disparity Reduction Aid, but does not include the portion of the levy that comes from Fiscal Disparities.

Net property tax payable is the amount of taxes owed after subtracting applicable credits from the sum of the net tax capacity tax, the referendum market value tax, and the state tax.

The average net tax capacity rate is computed by dividing the total net tax capacity levy excluding special assessments by the total net tax capacity, then multiplying by 100. For purposes of the net tax capacity tax rate calculation:

  • "levy" includes the tax increment financing levy and the fiscal disparity contribution levy; and
  • "tax capacity" includes the total net tax capacity before the subtraction of the tax increment financing captured net tax capacity and before any fiscal disparities adjustments.

This rate represents the average local net tax capacity rate of taxation on all property.

April 2019