How Property Taxes are Calculated

To understand how taxes are calculated, a look back at Michigan's history is in order.

Taxable Value vs. Assessed Value
Until 1994, property in Michigan was assessed at half its market value for tax purposes. This is known as a property's assessed value (AV).

In 1994, Michigan voters passed Proposal A, which changed the State's constitution. Proposal A shifted some of the tax burden off of property and onto the sales tax, which rose from (4) to (6) cents on every dollar spent.

The result of this proposal was the development of a new way of calculating property taxes using what's known as a property's taxable value (TV). A property's taxable value is determined using one of the equations (whichever one is less) below:

(Last year's taxable value) - (losses) + (5%) + (additions); or
(Last year's taxable value) - (losses) + (the rate of inflation) + (additions)

Under Proposal A, the growth of a property's taxable value is limited or "capped" with annual increases of not more than the lesser of five percent (5%) or the Consumers Price Index (CPI), which is set by the Michigan State Tax Commission.

The taxable value cannot be greater than a property's assessed value. However, when a piece of property is sold or a title is transferred, the property's taxable value becomes equal to the amount of its assessed value for the tax year following the year in which the sale or transfer took place. This is called "uncapping" a property's taxable value. After this has taken place, the lesser of five percent (5%) or the CPI applies to future increases in taxable value, until there is another sale or transfer of ownership of the property.

The taxable value for parcels in the City of Mount Clemens can be found on the parcel owner's annual tax bill or assessment change notice.

Property Assessment
Even though taxes are based on taxable value, the assessed value is still calculated each year so that property values can be uniformly assessed at 50 percent of market value, as required by the Michigan Constitution.

The City of Mount Clemens' Assessor's Office annually assesses each property within the city using mass appraisal techniques. This involves studies and analysis of the local real estate market.

The City Assessor also considers new construction, improvements to property (such as installing fencing or new pavement), and demolition of structures when calculating additions and/or losses to property values.

What's a Mill?
The property tax rate in Michigan is referred to as a millage, and it's figured in mills. One mill is equal to 1/1,000 of a dollar.

More simply, for every $1,000 in taxable value, a property owner will pay $1 in property tax.

Figuring Your Taxes
Property owners can calculate their tax bill by multiplying their taxable value by the millage rate.

For example, if the City's millage rate is 10 mills, property taxed on a home with a taxable value of $50,000 would be $500. The mathematical equation below illustrates how this is figured:

10 ÷ 1000 x $50,000 = $500

Administration Fee: In addition to levying property taxes, the City of Mount Clemens levies a one percent (1%) administration fee based on the amount of property tax paid. This helps cover the City's costs to determine and defend annual assessments.

To figure the amount due in administration fees on a home with a taxable value of $50,000, see the example below:

$500 property taxes x 0.01 = $5.00

Total Taxes Due: In the example above, the administration fee of $5 added to $500 in property tax would equal a total of $505 owed.

How Taxes Are Collected and Dispersed
Numerous millage rates could determine the amount of total tax owed on a particular property. In most communities, there is likely to be a millage to operate local government (such as the City of Mount Clemens), and another for the county (such as Macomb). In addition, part of the millage rate could include mills for libraries, police and fire or schools.

In Mount Clemens, per State law, the City of Mount Clemens collects taxes for these taxing entities:

  • Mount Clemens Public Schools
  • MISD
  • Macomb Community College
  • L'anse Creuse Public Schools
  • Mount Clemens Public Library
  • Macomb County
  • State of Michigan Education Tax

Millage Rates: Each taxing jurisdiction has its own millage rate. These rates do not appear on City-issued assessment notices; however, Mount Clemens property owners can find out their millage rates by looking at their tax bills, or by calling the City of Mount Clemens Assessor's Office at 586-469-6818 ext. 4.