How is the effective tax rate calculated?

The effective tax rate is calculated by dividing the total tax levy by the total assessed value of the property. This method provides a clear picture of the tax burden relative to property values within a taxing jurisdiction.

The total tax levy represents the amount of money that the taxing authority needs to raise for the budgeted expenses. On the other hand, the total assessed value aggregates the values of all properties within the tax district, allowing the effective tax rate to reflect the average tax burden on property owners. By using this calculation, stakeholders can better understand how much of their property's assessed value is being taxed.

This approach is essential for property assessments as it helps ensure fairness and equity in property taxation. Other methods mentioned in the question do not provide the same clear measure of tax burden on property relative to property value.