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Property tax is an annual payment paid by property owners to authorized taxing entities, including cities, towns, counties, schools and other groups. At the simplest level, homeowners and businesses pay property taxes based on the value of their land and any permanent structures on their land, like buildings. Some property types are exempt from paying property taxes, including public schools, houses of worship, government buildings, and non-profit organizations.
While a city or town will likely be included on your property tax bill, most property tax dollars are collected to fund education. In fact, only 13% of property tax dollars go to a city or town on average. In return for paying municipal property taxes, you receive essential services and infrastructure that we all rely on every single day, such as:
Emergency responders are there when you need them, parks remain open, clean water comes out of your tap, and streets get repaired thanks to the smart investment of property tax dollars.
The public services we benefit from today were built and maintained by both previous and current generations’ property taxes. Building a vibrant community doesn’t happen overnight, it takes all of us working together.
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In Utah, cities and towns are responsible for providing essential services such as police and fire, maintaining roads and water systems, and promoting quality of life through parks, recreation, and open spaces.
Homeowners and businesses invest in their community by paying property taxes. Because municipal services are ongoing, you will still need to pay property taxes every year– even if you’ve paid off your mortgage.
One homeowner can’t personally maintain all of the roads they use or fund an entire fleet of fire trucks. Your community collectively funds these municipal services.
While property tax is an important source of revenue, it typically only makes up about 20% of a municipal budget. Just like homeowners and businesses, cities and towns have to live within their means; they can’t spend more money than they take in.
If a city or town does not have enough money to pay for services, local officials may need to reduce or reprioritize services, or increase their portion of property taxes.
But much like a leaky roof or an old furnace, certain services can’t be ignored without causing bigger problems later, so local officials must strike a careful balance.
State law requires public budget processes. You can get involved as your municipality considers what investments to make to maintain critical infrastructure and quality of life for the residents of today and tomorrow. Just as the property owners before you paid property taxes and gave input to support the critical municipality, your property tax dollars and voice make a similar investment.
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Property values are key to determining how much property tax an owner pays. County assessors determine the market value of each property. The market value assessment is intended to be close to what your house could sell for. The market value is also the base amount that a tax rate is applied to.
Properties are taxed at 100% of market value unless they qualify for a residential exemption. Only 55% of the assessed market value of a primary residence is taxed, regardless of whether the owner or a renter lives there.
Property values change due to market shifts, property improvements, or the county’s reassessment of the property. Counties provide property owners with an opportunity to appeal their taxable value.
Increased property values do not result in your local government collecting more money. However, different increases in property values can result in tax shifts between property owners.
For example, if your home’s value increases $10,000 and your neighbor’s stays the same, you may pay more in property tax than you did last year while they may pay less.
Local governments set their budgets independently of property values, meaning rising values alone don’t increase government revenue, but changing values can shift the tax burden among property owners.
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If your municipality wants to generate more property tax revenue than the previous year, they must go through a public notification and hearing process called ‘Truth in Taxation.’
This starts in a public hearing in the spring, when your shares the proposed tax increase, approximately what it would cost the average homeowner, and how that money would be spent.
You can find this information on your municipality’s website, or at town hall.
By June 30, your council will need to approve an interim budget and a separate property tax increase schedule which explains by department how the proposed property tax increase would be spent.
This is needed because the fiscal year starts July 1st, but a tax increase can’t be formally approved until after the public hearing in August. Money equivalent to the proposed increase will be held in a separate fund until residents have the opportunity to weigh in and the council has officially voted on whether to raise property tax revenue.
You can start reaching out to your council in the spring with questions about the budget and suggestions.
You can also share your thoughts at the public hearing in August.