How the 1% Property Tax Levy Limit Works

What is the 1% limit on property tax increases? 

The 1% increase limit applies to the amount of property tax collected by each tax district. The 1% increase limit does not apply to individual property taxpayers.

In other words, it limits the amount the budgets of individual taxing districts can increase annually. For example, if the fire district received $1 million in property taxes one year, it can only receive $1.01 million the next year.

Examples of how the 1% limit work (assume there are only 2 properties in the county)

1 Percent increase Year 1 and Year 2 (Same AV in Year 2)_

The total levy is 1% more than the prior year and each of the two-equal value homes split the levy equally.

Year 2 - Scenario #1 Takeaway: Assessed value only determines a home’s share of the levy. If all home values were to change by the same percentage, then each home’s share of the levy would stay the same and everyone’s taxes would increase by exactly 1%.

1 Percent increase Year 2 (both homes increase diff AV)

The total countywide levy increased the maximum 1%, but the tax bill for Home 1 increased by 35% while the tax bill for Home 2 decreased by 33%.

The total levy is still $202, but more of it is paid by Home 1 since the assessed value increased more than Home 2.  

Year 2 - Scenario #2 Takeaway: Assessed value only determines a home’s share of the levy. Taxes on individual homes could increase by more or less than 1% depending on how they change in value relative to other properties.

Exceptions to the 1% Limit

There are exceptions to the 1% limit.

  1. The taxing districts may seek voter approval through a levy lid lift or excess levy to increase the budget by more than 1% over the prior year. 
  2. In addition to the 1% limit to the budget, if there are properties with new construction that were not captured in last year's assessment values,  the tax generated by the new construction is applied to the current year's taxing district's budget.