CLEVELAND, Ohio - Taxes are complicated, and skyrocketing property values can be scary, but we can say one thing for certain: Your increase in taxes will be less drastic than the increase in your home value.
Residents across Cuyahoga County received letters this summer with their new property values and people are understandably spooked. On average home market values are up 32% — some are up much higher.
It’s not uncommon for a homeowner to see a $50,000 increase in their market value. But the silver lining is that huge increases in property values do not create a proportional increases in tax bills.
State law prevents it.
“The increase isn’t one-for-one,” said Lisa Rocco, the Cuyahoga County Fiscal Office’s director of operations. “House Bill 920 was put in place for that reason.”
In many cases voters approve dollar amounts at the ballot box, not tax rates. Passed in 1976, Ohio House Bill 920 reformed property taxes to protect many voted-in taxes from inflation.
The math the county has to do behind the scenes is complex, and state law is nuanced. The easiest way to describe it is this: Most people will see a tax increase, because some property taxes we will rise with inflation. But many of the taxes we pay included in the overall bill don’t rise directly with inflation.
A closer look
To show you House Bill 920 in action, we’ll start with taxes from Cuyahoga County, because it’s the part of our tax bill most of us have in common. County taxes are one part of the overall bill that also includes taxes for cities, schools and other organizations like libraries.
Cuyahoga County’s approved tax rate is 14.85 mills. But the effective tax rate is already reduced to 12.26 mills to account for 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 mills that go toward the county’s general fund as debt service. But the rest of the county tax bill, which includes levies approved at the ballot box, can’t go up with inflation.
Let’s say a $10 million levy is approved. Officials have to look at all the property values in an area and come up with a tax rate that would collect $10 million. That’s the rate in mills we see on voting day.
Officials must redo the math and come up with a new tax rate when property values change.
What does all this mean?
Each overall tax bill is different. The taxes homeowners pay is split among their municipality, their school district and organizations like the Cleveland Metroparks. Some of us pay taxes for Southwest General Hospital or the Shaker Heights Library as part of our bill.
But across the board, tax rates are adjusted so that your tax bill does not rise with inflation.
The approved tax rate in Cleveland is 128.63 mills, according to state data. But the effective rate for 2024 bills is 84.21 mills, or 30% lower, adjusted because of House Bill 920.
Lakewood’s tax rate is 165.16 mills, but its effective tax rate is 83.44 mills. Parma’s tax rate is 105.13 mills, but residents pay 71.42 mills. Euclid’s tax rate is 137.8 mills, but in reality residents pay a rate of 88.84 mills.
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.
The tax estimator says that if a home Parma has a 32% increase in property values, the yearly payment would increase 15%.
But it varies. The same home in Lakewood would see a 12% increase. In East Cleveland, a 32% increase in home value would lead to a 10% increase on yearly tax bills.
The calculations don’t include levies that may be approved in the upcoming November election.
Officials look at an entire taxing district when collecting money for a levy. If your home goes up by 10%, but your neighbors on average see 30% increases, your taxes may go down.
Tax rates can also be adjusted upwards in rare cases. If property values went down, like during the 2008 recession, officials may need to raise tax rates.
However, many levies are capped at the tax rate seen at the ballot box.
Portions of the bill that go up, or don’t go up with inflation?
House Bill 920 freezes some, but not all taxes. And of course there are oddities. Here are a few examples.
Ohio law allows for something called inside mills. House Bill 920 says each taxing district can collect up to 10 mills without going to the ballot box.
A taxing district includes the county, municipality and school district, so they need to sort out among themselves who gets those inside mills. But for homeowners, these 10 mills don’t get adjusted to be lower for inflation.
Additionally, a city or village can also put taxes into its charter for expenses like the fire department. These charter taxes can rise with inflation because the tax rates stay constant.
In most other cases, taxpayers are on the hook just for a dollar amount that does not increase with inflation.
Say residents vote in favor of a bond issue to build a new school. The loan payment — principal and interest — has to be paid. So if property values go up, the tax rates will go down to collect what’s needed to pay off the loan.
A standard levy and emergency levy are both based on dollar amounts. Officials will reduce the tax rate so that they collect whatever dollar amount was voted for. In most cases these means adjusting the tax rate down when home values go up.
There is one big difference that would only come into play if property values drop.
On a normal levy, the tax rate cannot go higher than then mills approved at the ballot box. But an emergency levy can be adjusted higher if it has to be to collect the dollar amount residents voted for.
Reading your tax bill?
To bring together all this information, let’s take a look at the tax bill mailed to homeowners or available to see online.
- Market value: Your market value is what appraisers think your house could sell for, and that is the number listed on the forms you received in the mail for the new appraisals. However, that isn’t the number used to calculate your taxes.
- Assessed value: Taxes are calculated using the assessed value, which is always 35% of the market value of homes. This shows up on your tax bill as the “35% taxable value.”
- Tax rate: Your tax rate is measured in mills. You will see this number on your tax bill but you’ll also see two others terms - your reduction factor and the effective tax rate.
- Reduction factor: The reduction factor shows how much your tax bill is reduced because of House Bill 920.
- Effective tax rate: The effective tax rate is that rate that is actually applied to your assessed value to calculate your taxes. Each mill is $1 per $1,000 of assessed value. On a $200,000 home (assessed value of $70,000), a 1-mill levy would be $70.
- Homestead reduction: For qualifying homeowners, the homestead reduction takes $26,200 off your home’s market value. Homeowners must be 65 or older or disabled and earn no more than $38,600 to qualify, or have been grandfathered into the program before 2014 when there were no income requirements. Learn how to apply here.
- Owner-occupancy tax credit: The owner-occupancy tax credit provides a 2.5% tax break for a homeowner’s primary home. It only applies to taxes approved before November 2013.
- Non-business credit: You’ll also see a non-business credit. This for residential properties. It amounts to a 10% cut to taxes approved before November 2013. You can see if you’re getting these credits by viewing your property on myplace.cuyahogacounty.gov. Homeowners can contact the county’s fiscal office at 216-443-7420 (select option 3) to discuss their eligibility for the various tax programs.
- Assessments: Some tax bills may also have what are called assessments. These are not tied to property values and are not property taxes. In most cases they are fees to help pay for improvements your city made, like street lights or sewer lines.
If you think your property value is wrong you can file for an informal review. The form needed and each homeowners’ PIN was mailed to residents along with their new property values. If you have not received your letter, you should contact the county for a copy.
You can submit the informal review 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 the business reporter for cleveland.com and the Plain Dealer. You can reach him at smcdonnell@cleveland.com.
If you purchase a product or register for an account through a link on our site, we may receive compensation. By using this site, you consent to our User Agreement and agree that your clicks, interactions, and personal information may be collected, recorded, and/or stored by us and social media and other third-party partners in accordance with our Privacy Policy.
