Tax Aids and Credits

Credits - Supplemental Taconite Homestead Credit

Statewide Outcome(s):

Supplemental Taconite Homestead Credit supports the following statewide outcome(s).

Strong and stable families and communities.

Context:

For some taxpayers, property taxes are a significant cost to owning a home. Property tax refunds, credits and reimbursements exist in various forms to reduce property tax burdens on homeowners and/or businesses.

Funding Source: State General Fund.

Strategies:

Provide credits that are equivalent to the regular taconite credits to certain areas that are adjacent to the taconite relief area but face similar issues.

The supplemental taconite homestead credit was created by the 1980 Legislature. The credit is equal to either 57 percent or 66 percent of the homestead tax depending on the area of the taconite taxing district in which it is located. The maximum amount of this credit is $289.80 for homesteads receiving the 57 percent credit and $315.10 for those receiving the 66 percent credit.

Results:

Property taxes are more affordable for residential homesteads adjacent to the taconite relief area.

Performance Measures Notes:

86% of homesteads receiving the credit get the maximum amount.

The effective tax rate (ETR) for a property is equal to the net property tax divided by its market value. The ETR can be interpreted as a measure of how much property tax is paid per $1,000 in market value. The ETR for homesteads receiving the supplement taconite homestead credit was 0.65 percent for taxes payable in 2012. Without the supplemental taconite homestead credit, the ETR for homesteads would have been 0.82 percent (assuming all other factors held constant). The average ETR for homesteads statewide was 1.28 percent for taxes payable in 2012.

Average property tax reduction compares payable year 2011 (previous) to 2012 (current).