Property taxes due are each year during April and October. Each spring, I frequently receive questions from constituents about how property taxes are calculated. With the first half of property tax payment due in April, I thought it was a good time to provide background into how property taxes are calculated.
The Auditor’s office is responsible for keeping track of tax levies for each of the taxing authorities in the County. The Auditor receives tax requests (budgets) from all the taxing entities within the County (school districts, townships, towns, road districts, etc.) Upon receipt, the Auditors’ office converts requests for taxes into a levy that will be assessed to all taxable property. This includes all real property, defined as the land and any improvements on the land.
Minnehaha County levies about 22% of your property tax bill. The County’s 22% portion of your property tax dollars fund public safety, courts, highways, and other County departments.
Beginning in the mid-1990’s, South Dakota law limits the growth of property taxes based on what the governing body received in the previous year. If an opt-out is used to exceed the limits, the amount of opt- out is needed along with the new growth in the County. The last piece of information needed is the Consumer Price Index (CPI) which is computed by the State Economist for the prior year.
An example of calculating the tax request for a taxing entity:
- Prior year’s budget x (CPI % + Growth %) = allowable increase in taxes
- Example: $10,000,000 x (1.0% + 2.5%) = $350,000
- Maximum budget request (without opt outs) = $10,350,000
- Any tax request that exceeds the prior years’ budget + CPI + Growth would require an Opt Out.
Calculating a tax levy for each taxing entity is determined by dividing the tax request by the total taxable value within the taxing entity and multiplying the results by 1,000. An example of calculating a tax levy:
- Requested Tax Amount / Value of property
- ($10,000,000 + $350,000) / $1,500,000,000 = 0.0069
- Levy = 0.0069 x 1,000 = 6.900
Calculating individual taxes is determined by taking a property’s taxable value multiplied by the levy. An example of calculating individuals’ tax:
- (Property Value / 1,000) x levy
- ($250,000 / 1,000) = 250
- 250 x 6.9 = $1,725
