Understanding Taxes

The Tax Statement
The Auditor-Treasurer is responsible for printing and mailing of tax statements.
The statement contains a listing of the dollar amount due to each taxing authority and the amount of the state determined school tax from the parcel of real property for which the tax statement is prepared.
The dollar amounts attributable to the county, state general tax, voter approved school tax, the other local school tax, the township or municipality, must be separately stated.
In the upper left portion of the statement is the Property ID Number (or parcel number) and a brief legal description of the property this tax bill is for.  It also includes information on the property owner(s).
Real and personal property tax statements must list, for both current and prior year:
  1. all property classes                           
  2. improvements excluded                     
  3. new improvements/expired exclusions
  4. estimated market value                      
  5. taxable market value                         
This information appears in the upper right corner of the statement.
Real and personal property tax statements must contain the following information in the order given below.  The information must also contain the current year tax information in the right column with the corresponding information for the previous year in the left column:
Line 1 - Qualifying Tax Amount Use this amount on Form M1PR to see if you are eligible for a Homestead Credit Refund:  This line represents the qualifying tax amount to be used when filing for the Homestead Credit Refund. For farms it only includes the tax for the house, garage and 1 acre and for residences it is limited to 10 acres.

Line 2 -Prior Year Qualifying Tax Amount for Special Tax Refund Amount

Use these amounts on Form M1PR to see if you are eligible for a special refund:  This line represents the qualifying tax amount for homestead property from the previous year. It is used when filing for the M1PR special refund on properties that have experienced a large increase in taxes from one year to the next.
Line 3 - Property Taxes before Credits
This is the total of the tax before the deduction of Agricultural and Rural Land Credits shown on line 4A and other credits to reduce your property tax shown on line 4B
Line 4 - Credits that reduce Property Taxes Credits paid by the state of Minnesota to reduce your property tax.  4A:  Agricultural & Rural Land Credits (Aggregate of the agricultural market value credit & school bond credit) 4B:  Other credits to reduce your property tax (Total Amount of other miscellaneous credits)
The miscellaneous credits include: disaster, powerline, ag preserve, conservation, supplemental homestead, disparity reduction, and the bovine tuberculosis.
Line 5 - Property Taxes after Credits The net tax payable, after reduction for credits.  This includes net tax capacity-based taxes and market value-based taxes, but does NOT include any special assessments.  This amount should equal line3 minus lines 4A and 4B.
Line 6 - County Portion County Portion:  The county's portion of the property tax and Regional Rail Authority tax or Lake Improvement District tax (if applicable).
Line 7 - City or Town Portion City or Town portion: This lists the portion of the tax certified by the city or township to be collected as property tax.
Line 8 - State General Tax State General Tax: This would list any State General Tax levied on Commercial, Industrial or Seasonal property.
Line 9 - School District Portion School District: This lists the portion of the taxes to be collected for the school district.
Line 9A shows the amount approved by voters at a general election.
Line 9B lists the amount raised by other local school levies.
Line 10 - Special Taxing District Shows the share of tax for the special taxing districts  Line 10A is for special taxing districts & Line 10B is for tax increment
Line 11 - Non-school voter approved referenda levies
This is the total of the market value based referendum taxes for all taxing districts except school districts.
Line 12 - Total Tax before Special Assessments
This is the total of lines 6 - 11 and should be the same as line 5.
Line 13 - Special Assessments on Your Property Special Assessments added to this property tax bill: Special assessments are broken down by each assessment, ex: Solid Waste, Ditch, Sidewalk & street, Sewer, Fire Department and Ambulance.
Line 14 - Total Property Tax and Special Assessments This is the total property tax payable including special assessments. Starting in 2011, if this total is $100.00 or less, the total amount is due on May 15. (For Mobile Homes, if the total is $50.00 or less, the total amount is due on August 31.)

Tax Stubs and Return Envelopes
The bottom portion of the tax statement includes two tax stubs to be used when paying your property taxes:  The stub on the right is to be used for the May 15 - 1st half or full year payment while the left stub is for the 2nd half payment.

If your total Real Estate tax is $100 or less, your tax is due in full on May 15 (mobile homes - tax of $50 or less is due Aug 31).  Use only the first tax stub.  The second stub will not have a dollar amount printed on it.

Please use your tax stubs when paying your property tax as this assures your payment goes to the proper tax parcel.  If you own more than one property, you will receive more than one tax statement.

Please include all stubs when paying. You may write one check for multiple parcels.

Use the space provided on the back of the payment stub to indicate an address change.

Also included with the statement are return envelopes with windows. Make sure the Auditor-Treasurer's address on the tax stub shows in the window. Please affix proper postage to your envelopes.

Tax Glossary:

Apportionment - The share allocated to a group or unit of government as a result of a specific plan or law. 

Categorical Aid - Aid given to a local unit of government to be used only for a specific purpose. 

Class Rates - The percent of market value set by state law, based on use and property type, that establishes the property’s tax capacity subject to the property tax. 

County Program Aid – Property tax relief aid from the state with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases. 

Education Aid - The total amount of state dollars paid for K- 12 education. This aid is paid to the school districts. 

Fiscal Disparities - A seven-county metro area aid program in which 40% of the commercial/industrial tax base of communities forms the “pool” of aid to metro communities without that tax base. 

General Purpose Aid - Aid given to units of government to be used at their own discretion. Examples are Local Government Aid and County Program Aid. 

Highway Aid - The motor fuels tax money the state distributes to counties, cities and townships for highways and bridges. 

Homestead - A residence occupied by the owner. 

Individual Income Tax - A state tax on the income of residents, and non-residents with Minnesota sources of income. 

Levy - The imposition of a tax, usually by a local unit of government. 

Levy Limit - The amount a local unit of government is permitted to levy for specific services. 

Limited Market Value – A state imposed limit on property value increases for the purpose of calculating property taxes. 

Local Government Aid (LGA) - Money (in the form of general distribution aid) provided to cities for property tax relief.  Applies only to residential, agricultural and seasonal cabins.

Local Sales Tax - A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government.

Local Tax Rate - The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property. 

Market Value - An assessor’s estimate of what property would be worth if it were sold. 

Market Value Agriculture Credit – A state credit to buy down the property tax rate paid by agricultural homesteads to the local taxing jurisdiction. 

Market Value Homestead Credit – A state credit to buy down the property tax rate paid by a residential homestead to the local taxing jurisdiction. 

Property Tax - A tax levied on any kind of property. 

Property Tax Refund - A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners and renters. 

Sales Ratio Study – A Minnesota Department of Revenue conducted study of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market. 

Sales Tax - A tax levied on the sale of goods and services. 

State General Property Tax - A state-imposed property tax on commercial, industrial, and seasonal recreational properties.

State Sales Tax - A state tax (6.875%) levied on the sale of goods and services that is deposited into the state general fund.

Tax Capacity - The valuation of property based on market value and class rates, on which property taxes are determined.