On what basis are property taxes determined?

Property taxes are determined based on the assessed value of the property in conjunction with the local tax rate. The assessed value is a valuation of the property set by the local government, reflecting its estimated worth for taxation purposes. This assessment is often calculated using current market values but is not exclusively based on them; it also considers other factors such as property improvements and neighborhood characteristics.

The local tax rate, which varies by jurisdiction, is then applied to this assessed value to calculate the total property tax due. This method ensures that the taxes are relatively proportional to a property’s value while allowing local governments to finance public services such as schools, police, and infrastructure.

Other options focus on narrower aspects of property tax determination. For example, the current market value alone does not incorporate tax rates, and solely relying on historical value overlooks necessary adjustments that address current economic conditions. Additionally, just distinguishing between residential and commercial properties does not address the comprehensive approach required for setting property taxes. Therefore, the combination of assessed value and the tax rate provides a more accurate and fair basis for determining property taxes.