CLEVELAND, Ohio — Taxes are complicated and skyrocketing property values ​​can be scary, but we can say one thing for sure: Your tax increase will be less drastic than the increase in your home’s value.

Residents throughout Cuyahoga County received letters this summer with their new property values ​​and people are understandably worried. On average, property market values ​​have increased by 32% – some even more.

It’s not uncommon for a homeowner to experience a $50,000 increase in market value. But the good news is that huge increases in property values ​​don’t result in a proportional increase in the tax bill.

State law prevents this.

“The increase is not a one-for-one increase,” said Lisa Rocco, operations manager of the Cuyahoga County Fiscal Office. “That is why House Bill 920 was introduced.”

In many cases, voters vote on dollar amounts, not tax rates, at the ballot box. Ohio House Bill 920, passed in 1976, reformed property taxes to reduce many decided on taxes to combat inflation.

The calculations the county has to make behind the scenes are complex, and state laws are nuanced. The simplest way to describe it is this: Most people will see a tax increase because some property taxes go up with inflation. But many of the taxes we pay that are included in the overall bill don’t go up directly with inflation.

A closer look

To show you House Bill 920 in action, we’ll start with Cuyahoga County taxes, since that’s the part of our tax bill that most of us have in common. County taxes are one part of the overall bill, which also includes taxes for cities, schools, and other organizations like libraries.

The approved tax rate in Cuyahoga County is 14.85 per thousand. However, the effective tax rate has already been reduced to 12.26 per thousand due to inflation and rising property values.

We’ll explain Mills later, but for now, just think of Mills as a unit of measurement for tax rates.

House Bill 920 freezes 1.45 percent of what goes into the county’s general fund as debt service, but the rest of the county’s tax bill, which includes levies passed at the ballot box, cannot increase with inflation.

Let’s say a $10 million tax is approved. Officials have to look at all the property values ​​in an area and set a tax rate that will raise $10 million. That’s the tax rate in per thousand that we see on election day.

If property values ​​change, officials must repeat the calculations and set a new tax rate.

What does all this mean?

Every tax bill is different. The taxes homeowners pay are split between their municipality, their school district, and organizations like the Cleveland Metroparks. Some of us pay taxes to Southwest General Hospital or the Shaker Heights Library as part of our bill.

However, tax rates are generally adjusted so that your tax burden does not increase due to inflation.

The approved tax rate in Cleveland is 128.63 per thousand, according to state data. However, the effective tax rate for the 2024 bills is 84.21 per thousand, or 30% lower, adjusted due to House Bill 920.

Lakewood’s tax rate is 165.16 per thousand, but the effective tax rate is 83.44 per thousand. Parma’s tax rate is 105.13 per thousand, but residents pay 71.42 per thousand. Euclid’s tax rate is 137.8 per thousand, but residents actually pay a rate of 88.84 per thousand.

Officials have estimated tax rates for 2025 bills, and you can use Cuyahoga County’s online tax estimator to see what your next tax bill will look like at cuyahogacounty.gov/taxestimator.

According to tax assessors, if the property value of a house in Parma increases by 32%, the annual tax payment would increase by 15%.

But it varies. The same home in Lakewood would see a 12% increase in value. In East Cleveland, a 32% increase in value would result in a 10% increase in the annual tax bill.

The calculations do not include any taxes that could be approved in the upcoming elections in November.

When governments collect money for a levy, they take an entire tax district into account. If your home value increases by 10%, but your neighbors pay an average of 30% more in taxes, your taxes may go down.

In rare cases, tax rates can also be adjusted upward. If property values ​​fall, as during the 2008 recession, authorities may need to increase tax rates.

However, many taxes are capped at the tax rate applicable at the ballot box.

Parts of the bill that increase or do not increase with inflation?

Bill 920 freezes some, but not all, taxes. And of course there are oddities. Here are some examples.

Ohio law allows for so-called inside mills. House Bill 920 would allow each taxing district to collect up to 10 mills without going to the ballot box.

A tax district includes a county, municipality and school district, which must decide among themselves who receives the tax rates. For homeowners, however, these 10 tax rates are not adjusted for inflation.

In addition, a city or village can include taxes for expenses such as the fire department in its charter. These charter taxes can increase with inflation because tax rates remain constant.

In most other cases, taxpayers only have to pay a dollar amount that does not increase with inflation.

Suppose residents vote to issue a bond to build a new school. The loan payment – principal and interest – must be paid. So if property values ​​rise, tax rates will fall to raise the amount needed to pay off the loan.

Both a standard levy and an emergency levy are based on dollar amounts. Officials lower the tax rate so that they collect the dollar amount they voted for. In most cases, this means that the tax rate is adjusted downward when property values ​​increase.

There is a big difference that would only come into play if property values ​​​​decline.

In a regular levy, the tax rate cannot be higher than the amount approved by voters at the ballot box. However, an emergency levy can be set higher if it is necessary to raise the dollar amount voted by citizens.

Are you reading your tax bill?

To summarize all this information, let’s take a look at the tax notices that are mailed to homeowners or available online.

• Market value: Your market value is the amount the appraisers think your home could sell for. This is the amount that appears on the forms you received in the mail for the new appraisals. However, this is not the amount that is used to calculate your taxes.
• Rated value: Taxes are calculated on the basis of the assessed value, which is always 35% of the market value of houses. This will appear on your tax bill as “35% taxable value”.
• Tax rate: Your tax rate is measured in mills. You will find this number on your tax bill, but also two other terms – your reduction factor and the effective tax rate.
• Reduction factor: The reduction factor shows how much your tax liability is reduced as a result of House Bill 920.
• Effective tax rate: The effective tax rate is the rate that is actually applied to your assessed value to calculate your taxes. Each per thousand is $1 per $1,000 of assessed value. On a $200,000 home (assessed value $70,000), a 1 per thousand levy would be $70.
• Reduction of the home stock: For eligible homeowners, the Homestead Reduction reduces the market value of your home by $26,200. Homeowners must be 65 or older or disabled and earn no more than $38,600 to qualify, or you were accepted into the program before 2014 when there were no income requirements. Here’s how to apply.
• Homeowner tax credit: The homeowner tax allowance grants a homeowner a tax reduction of 2.5% for his or her primary residence. This only applies to taxes approved before November 2013.
• Non-business credit: You will also see a non-business tax credit. This applies to residential properties. It is a 10% tax reduction on taxes approved before November 2013. You can see if you qualify for these credits by viewing your property on myplace.cuyahogacounty.gov. Homeowners can contact the county tax office at 216-443-7420 (select option 3) to discuss their eligibility for the various tax programs.
• Reviews: Some assessments may also include what are called levies. These are not tied to the property value and are not a property tax. In most cases, these are fees to finance improvements your city has made, such as street lights or sewer lines.

If you believe your property value is incorrect, you can request an informal verification. The required form and each homeowner’s PIN were mailed to residents along with their new property values. If you have not received your letter, you should contact the county to request a copy.

You can submit the informal appraisal online. You can also mail it or bring it in person. The address is: Cuyahoga County Fiscal Office, Appraisal Department, 3rd Floor, 2079 East Ninth St., Cleveland, Ohio 44115.

Sean McDonnell is a business reporter for cleveland.com and the Plain Dealer. You can reach him at [email protected].