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Scenario A (Baseline)

Scenario B (Comparison)

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About

Property tax obligations vary significantly based on zoning classifications and local jurisdiction formulas. Investors and developers must distinguish between nominal tax rates and effective tax burdens when assessing a portfolio. Commercial and industrial properties often face higher assessment ratios or class-specific multipliers compared to residential assets. Miscalculating these distinct liabilities distorts Net Operating Income projections and affects capitalization rate valuations.

This tool isolates the variables of assessment ratios, millage rates, and class multipliers to provide a granular tax estimate. It supports side-by-side comparison to evaluate how re-zoning or relocating an asset changes the fiscal outcome. Accuracy in these figures is essential for feasibility studies and long-term holding cost analysis.

property tax millage rate commercial tax industrial tax real estate analysis

Formulas

The core calculation determines the Assessed Value before applying the Millage Rate and Class Multipliers. The effective tax bill is derived as follows:

Tax = MarketValue Γ— Ratio100 Γ— Millage1000 Γ— ClassFactor

Where the Millage represents the amount of tax payable per thousand currency units of the assessed value. Comparison logic uses the delta between two scenarios:

Ξ”Tax = | TaxA βˆ’ TaxB |

Reference Data

Property ClassAssessment Ratio (Avg)Base MultiplierCommon Effective Rate
Residential (Class 1)10% - 20%1.00x0.8% - 1.5%
Multi-Family (Class 2)20% - 45%1.45x1.2% - 2.5%
Utility / Infrastructure (Class 3)40% - 50%1.85x2.0% - 3.5%
Commercial / Office (Class 4)45%2.10x2.5% - 4.0%
Industrial / Mfg45% - 50%2.15x2.8% - 4.2%
Agricultural Land5% - 10%0.50x0.2% - 0.6%
Vacant Land30%1.20x1.5% - 2.2%
Mixed-UseWeighted AvgVariable1.8% - 3.0%

Frequently Asked Questions

A tax rate is typically expressed as a percentage (e.g., 1.5%), while a millage rate is expressed in mills per dollar (or currency unit). One mill is equal to one-tenth of a cent or 0.001. Therefore, a millage rate of 15 is equivalent to a 1.5% tax rate.
Jurisdictions frequently tax income-generating properties at higher rates to relieve the tax burden on residential homeowners. This is achieved either through a higher assessment ratio (assessing a larger portion of the market value) or a direct class multiplier applied to the base rate.
The assessment ratio reduces the taxable value of the property. If a property has a market value of 500,000 and an assessment ratio of 40%, the tax is calculated based on 200,000. A lower ratio directly lowers the effective tax liability.
Specific local levies for schools, libraries, or emergency services are often added to the base millage rate. To get an accurate total, you must sum all individual millage components from your local tax authority and enter the aggregate figure into the Millage Rate field.