Property Tax Definitions
Property Tax – A tax on the real property owned by residents and businesses. Property tax includes the land and structures on it, but not the contents.
Homestead Exemption – A reduction in property tax that is available to all property owners who meet the income restrictions and are at least 65 years of age or permanently disabled, or who meet the disabled veteran qualifications for this exemption. (Qualifying disabled veterans do not have an income restriction.) Property owners must apply for the Homestead Exemption and reside in the home for which they are applying.
A Mill – Property tax is measured in mills. A mill means 1/1,000. Therefore, each mill generates $1 of taxes for every $1,000 of a property’s assessed value.
Tax Rate – The total property tax rate paid by a business or individual for support of the school system, library, township, municipality, vocational school, community college, park system and county-wide services. This rate includes voted millage and 10 mills of un-voted taxes guaranteed by the Ohio Constitution.
Taxing District – A geographic area that shares the same local property tax rate. (i.e. same school district, fire dept, ambulance, township/village.)
Inside Millage – The Ohio Constitution guarantees 10 mills of un-voted taxes, also called inside millage, for each taxing district in Ohio. The amount is allocated among various local public entities.
Outside Millage – Any millage that has not been allocated by the state constitution is considered outside millage. All outside millage is voted on by residents.
Continuous Levy – Millage that has been allocated for an unlimited period of time, either through state allocation or voter approval.
Limited-Term Levy – Levies that expire after a specified period of time.
Gross Millage – The number of mills originally approved or assigned in the first year of a continuous or limited-term levy.
Fixed Income Status – Under Ohio law, the amount of money a fixed income tax levy collects should remain at the sum it collected in its first year, except for added value each year from new construction. This became law in 1976 with the passage of Ohio House Bill 920 which requires an adjustment to the tax rate annually as property values in a district fluctuate.
Reduction Factor – A formula applied to businesses and homes in a taxing district so that Fixed Income Status will be maintained. Specifically, the tax reduction factor equals the percent by which the sums levied for a particular levy would need to be adjusted so that the current year’s taxes equal the prior year’s net taxes.
Rollback – Two tax relief measures have been granted by the state for homeowners:
- Non-Business Credit – a 10% rollback on qualifying levies for residential and agricultural properties (effective since 1971).
- Owner Occupied Credit – a 2.5% rollback on qualifying levies for owner occupied residences (effective since 1979).
Effective Tax Rate – In 1976, the legislature enacted property tax reform known as House Bill 920. Its purpose was to keep inflation from increasing voted taxes. When the voters approve a tax levy, they are agreeing to pay a certain amount of money for a specific purpose, over a given amount of time. House Bill 920 kicks in when property values increase due to inflation by lowering the “effective” rate. Conversely, when taxing districts have a decrease in valuation, House Bill 920 would increase the “effective” rate.
Renewal Levy – A property tax levy that collects the exact amount of tax dollars as the levy it replaces.
Replacement Levy – A property tax levy that enables taxing authorities to receive taxes based on the current valuation of all property in an area, including new development.
Special Assessments – Charges by your city, municipality, township, or county to cover the cost of improvements or services that they provide to a property or group of properties.