In my previous post, I mentioned that we would discuss a portion of the published notification for the public meeting to discuss the budget and proposed tax rate in greater detail. On the second page of the notice, there is a section titled “Comparison of Proposed Levy with Last Year’s Levy on Average Residence.” In this section a comparison is made between last year’s rate and this year’s proposed rate in five different areas: 1) Average Market Value of Residences; 2) Average Taxable Value of Residences; 3) Last Year’s Rate Versus Proposed Rate per $100 Value; 4) Taxes Due on Average Residence; and, 5) Increase (Decrease) in Taxes.
Last year, the average market value in EISD was $91,252. This year, the average market value increased to $103,184. This represents an increase of a little more than 13% in one year. Last year’s average taxable value was $67,072. This year, the average taxable value has increased to $86,318. This is an increase of over 28%.
Last year, our tax rate was $1.2763 per $100 value. This year, the proposed tax rate is $1.27, a decrease of $0.0063. However, even with a decrease in the tax rate, the taxes owed on a average valued residence will increase because of the sharp increase in the average taxable value of a residence. This is why there shows to be a $240.20 increase in taxes.
EISD is one of the few districts in the state that continues to offer an optional homestead exemption to taxpayers. In addition to the state homestead exemption of $15,000, EISD provides a 20% exemption on homesteads. This 20% is deducted first, and then the $15,000 state homestead is deducted. So, as an example, let’s look at the tax owed on a home valued at $100,000.
First, take 20% of $100,000 which is $20,000. Subtract that from $100,000. This is the optional homestead exemption. $100,000 – $20,000 = $80,000. Next, subtract $15,000 from $80,000. This is the state homestead exemption. $80,000 – $15,000 = $65,000. This $65,000 is the amount that will be taxed by EISD (in some cases, there may be more exemptions). To calculate the taxes owed, take $65,000 and divide it by $100: $65,000/$100 = 650. Multiply this number by our proposed tax rate of $1.27: 650 x $1.27 = $825.50. This would be the taxes owed on a $100,000 residence.
In this case, if EISD did not have the optional homestead exemption, this taxpayer would owe: $100,000 – $15,000 = $85,000. $85,000/$100 = 850 x $1.27 = $1,079.50. So, the 20% optional homestead exemption saved this taxpayer $254.
As always, I welcome your questions or comments. My email address is firstname.lastname@example.org.