Understanding Assessment Values and Millage Rates

Pennsylvania assessment law is based on various values and formulas.  Most property owners do not fully understand their property tax bills at first glance.  This section will help to clarify some of the confusion.

Assessed Value vs. Fair Market Value

Pennsylvania property assessment laws are confusing for many property owners simply because your assessed value typically will not equal what you believe is your fair market value (i.e., an appraised value). Each county assigns an assessed value for a property based on a ratio (known as the common-level ratio) of a base year. Only during the base year does the assessed value of a property typically equal the fair market value. The common-level ratio for each county is determined and published each year in mid-summer (effective the following tax year) by the Pennsylvania State Tax Equalization Board (S.T.E.B.). For example, the base year in Chester County is 1996 and the common-level ratio published in July 2016 for the 2017 tax year is 1.86. The common-level ratio in Lancaster County for the 2017 tax year is 1.32. Therefore, to determine the current fair market value that Chester County has used to determine your property taxes, you simply multiply your assessed value by the current common-level ratio.

EXAMPLE: Property XYZ is located in Chester County and has an assessed value of $320,000 that is taxed at a current fair market value of $595,200 ($320,000 x 1.86). To determine if Property XYZ is over-assessed, you simply determine if Property XYZ would appraise for less than the current fair market value of $595,200. If Property XYZ would appraise for less than $595,200, then you would likely benefit from filing an assessment appeal.

Tax Rates (Millage) and Calculating Your Tax Burden

In most municipalities, each property owner annually receives property tax bills from three taxing authorities: a county property tax bill (typically mailed in winter), a township/borough tax bill (typically mailed in late winter/early spring), and a school district tax bill (typically mailed in mid-summer). Each of the three taxing authorities will assign an annual tax rate (i.e., a millage rate) that is multiplied by the assessed value to determine your property tax burden. Often, the three millage rates will be combined into a total millage rate that is used to calculate your total property tax burden for the year. Millage rates are published on each county’s government website and are typically revised for the following tax year in mid-summer.

EXAMPLE: Property XYZ is located in New Garden Township and has a total millage rate for the 2017 tax year of 35.0238 (4.1630 county millage + 1.6200 township millage + 29.2408 school district millage). Since Property XYZ has an assessed value of $320,000, the total property tax obligation in 2017 is approximately $11,208 ($320,000 x 35.0238/1000).

Calculating Your Property Tax Savings

Your property tax savings is calculated by subtracting your reduced assessment value by your previous (higher) assessment value and multiplying the difference (i.e., your assessment reduction) by the current total millage rate for your township or borough. Therefore, a successful property tax appeal will lower your county property tax bill, your municipal property tax bill (some municipalities do not tax), and your school district tax bill.

EXAMPLE: Continuing with the examples from above, Property XYZ has been recently appraised for a fair market value of $430,000 and the Board of Assessment Appeals agreed to that value at the oral hearing. Therefore, the Board of Assessment Appeals will use the common-level ratio to calculate a new assessment of $231,180($430,000/1.86). The difference between the previous assessment ($320,000) and the new reduced assessment ($231,180) is $88,820. Finally, we multiply the assessment reduction ($88,820) by the current total millage (35.0238/1000) to obtain an annual tax savings of $3,110.


McClellan Legal LLC is located in Kennett Square and serves clients throughout the areas of Avondale, Chadds Ford, Coatesville, Downingtown, Landenberg, Oxford, Phoenixville, Pottstown, West Chester, & West Grove.

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