Tax Glossary

Apportionment - The share allocated to a group or unit of government as a result of a specific plan or law.

Categorical Aid - Aid given to a local unit of government to be used only for a specific purpose.

Circuit Breaker - See “Property Tax Refund.”

Class Rates - The percent of market value set by state law, based on use and property type, that establishes the property’s tax capacity subject to the property tax.

County Program Aid – Property tax relief aid from the state with a formula based on needs (households on food stamps, age of the population, number of serious crimes) and tax
base equalization for counties will smaller tax bases.

Education Aid - The total amount of state dollars paid for K- 12 education. This aid is paid to the school districts.

Fiscal Disparities - A seven-county metro area aid program in which 40% of the commercial/industrial tax base of communities forms the “pool” of aid to metro communities without that tax base.

General Purpose Aid - aid given to units of government to be used at their own discretion. Examples are Local Government Aid and County Program Aid.

Highway Aid - The motor fuels tax money the state distributes to counties, cities and townships for highways and bridges.

Homestead - A residence occupied by the owner.

Individual Income Tax - A state tax on the income of residents, and non-residents with Minnesota sources of income.

Levy - The imposition of a tax, usually by a local unit of government.

Levy Limit - The amount a local unit of government is permitted to levy for specific services.

Limited Market Value – A state imposed limit on property value increases for the purpose of calculating property taxes.

Local Government Aid (LGA) - Money (in the form of general distribution aid) provided to cities for property tax relief.  Applies only to residential, agricultural and seasonal cabins.

Local Sales Tax - A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government.

Local Tax Rate - The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property.

Market Value - An assessor’s estimate of what property would be worth if it were sold.

Market Value Agriculture Credit – A state credit to buy down the property tax rate paid by agricultural homesteads to the local taxing jurisdiction.

Market Value Homestead Credit – A state credit to buy down the property tax rate paid by a residential homestead to the local taxing jurisdiction.

Property Tax - A tax levied on any kind of property.

Property Tax Refund - A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners
and renters.

Sales Ratio Study – A Minnesota Department of Revenue conducted study of open market property sales, which is then compared to local assessments to ensure that local assessments adequately reflect the market.

Sales Tax - A tax levied on the sale of goods and services.

State General Property Tax - A state-imposed property tax on commercial, industrial, and seasonal recreational properties.

State Sales Tax - A state tax (6.5%) levied on the sale of goods and services that is deposited into the state general fund.

Tax Capacity - The valuation of property based on market value and class rates, on which property taxes are determined.

Provided by the Association of Minnesota Counties