Making Sense of the New York State Property Tax Cap
Q. Does the property tax cap affect property tax rates?
A. No. The NY State property tax cap law limits the dollar amount of taxes (the tax levy) that a school district and local government may raise by simple majority vote, and it requires a supermajority vote (60%) for levies that exceed the tax cap limit. The tax rate (which is the tax levy divided by the taxable assessed valuation of properties) is not subject to the tax cap formula. The tax rate is determined by several factors, only one of which is the tax levy.
Q. Can I expect my own tax bill to change at the same rate as the tax levy?
A. No. Your tax bill change may be higher or lower than the tax levy change. Your tax bill depends on the taxable assessment of your property, and changes to your assessment and other assessments in your community.
You can determine your individual tax bill by multiplying the tax rate for your class of property by the taxable assessed valuation of your property, and then dividing the answer by 100. For example: if your property has an assessed valuation of $1,500 and the tax rate for your community is $500/$100 of assessed valuation, your tax bill is $1,500 x $500 / 100 = $7,500.
Q. Will the tax cap be the same for my school district, county, and town?
A. No. Each school district and local government is required to calculate an individual tax cap limit using a New York State tax cap formula. This will be performed on an annual basis by each district and municipality. The data used in the calculation changes each year for each taxing authority, and therefore, the tax cap set for each district and municipality will vary.
Q. How does the carryover provision work? Can it be used to exceed the tax cap?
A. When the approved levy is less than the tax levy limit, the dollar amount of the difference, up to 1.5% of the limit, may be “carried over” into the next year’s tax cap formula. 2012 is the first year of the tax cap law, so a carryover is not available this year. The State will provide detailed guidance next year on the use of this carryover provision.
Q. What happens if a taxing jurisdiction exceeds the maximum allowable tax cap by mistake?
A. Municipalities and school districts are required to calculate their individual tax caps on their own, using a complicated NY State formula which allows exemptions based on certain variables. If the tax cap is exceeded due to an error, the excess levy must be placed in an interest bearing reserve account when the mistake is discovered, and these funds must be used to offset the tax levy in the following year.