My Taxes are TOO HIGH - Verifying the accuracy of a property tax bill

     Property tax bills can appear confusing. Hopefully, the information that follows will make the both the bill and the process used to create it, clearer. First, we'll look at how a simple "ad valorem" tax is computed for one unit of government. By the way, "ad valorem" means "to" or "of" the value. An ad valorem tax is a tax based upon some value. In the case of real property, it's the property's market value. In the case of personal property, usually this means the cost to acquire and install the property.

     Next, we'll provide an example using a fictitious tax bill to show how the three components fit together. Finally, for those of you who are interested, other information will be provided that more fully addresses how some of the individual components are created. (Note: the same method is used for both real estate and personal property taxes. This format is used by all taxing jurisdictions)

A Michigan property tax bill consists of three basic parts:

  1. a series of individual "ad valorem" tax levies
  2. fixed dollar levies called special assessments
  3. an optional "collection fee".

Basic formula used to calculate a "levy" or property tax for one unit of government:

     Tax Levy = Millage Rate times Taxable Value

Assumptions used to create this example:

Therefore, Annual Taxes in this example equal: $32 for every $1,000 of Taxable Value


Annual Taxes = ($32 x 50) = $1,600.00 per year

another way to express this is...       .032 x $50,000 - $1,600.00 per year


Taxing Entity or authorityMillage RateTaxable Value
Your City or Township5 mills$50,000$250.00$0.00$250.00
Your Local Schools18 mills$50,000$900.00$0.00$900.00
Michigan's State Education Tax6 mills$50,000$300.00$0.00$300.00
Your County 6 mills$50,000$300.00$0.00$300.00
Your Intermediate Schools2.5 mills$50,000$125.00$0.00$125.00
Your Community College2.25 mills$50,000$112.50$0.00$112.50
Your Mosquito Control Program0.5 mills$50,000$25.00$0.00$25.00
Your Public Safety3 mills$50,000$150.00$0.00$150.00
Your Special Assessment for SewersN/AN/A$0.00$700.00$700.00
Total Levy $2862.50
Collection Fee - charged for printing and mailing bills for others - 1% Maximum$28.63
Total Amount Due from Business or non-Homestead Taxpayer$2891.13
Homeowners (Homestead bill excludes local school tax)$1982.13

      Richard Gruber, former Michigan Department of Treasury Employee, teacher and County Equalization Director points out one important distinction taxpayers examining their bills frequently miss:       part of a tax bill is calculated by using property values - and part of your tax bill (the collection fee) is calculated by a charge against total taxes being levied. The collection fee is permitted under Michigan law because only one of the many "taxing units" actually prints a bill. The fee is used to reimburse the issuing unit for postage and other costs associated with handling the bill and properly distributing monies collected.

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