How is the tax rate calculated in relation to the total budget and aggregate assessed value?

The tax rate is calculated by dividing the total budget by the aggregate assessed value. This formula reflects the relationship between a municipality’s financial needs (represented by the total budget) and the value of the properties within its jurisdiction (represented by the aggregate assessed value).

When a municipality determines its budget for the upcoming fiscal year, it establishes how much revenue is required to meet its expenditures. The aggregate assessed value represents the total value of all taxable properties within the municipality. By dividing the total budget by the aggregate assessed value, you find the tax rate needed to raise the required revenue.

This calculation ensures that the tax burden is fairly distributed among property owners based on the assessed value of their properties. If the total budget increases, the tax rate may need to rise unless there is a corresponding increase in the aggregate assessed value. Understanding this relationship is essential for tax assessors in determining fair and equitable property tax rates.