Tax Glossary - Dakota County Minnesota

Ad Valorem Tax- A tax based on the value of real estate or personal property. Property tax is a form of Ad Valorem Tax.

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.

Green Acres-Green Acres is a property tax deferral program established for qualifying agricultural properties pursuant to Minnesota Statute 273.111, the Minnesota Agricultural Property Tax Law. It provides an opportunity for farmers to obtain a deferment from higher valuations and subsequent taxes payable on primarily productive agricultural land that has been increased to reflect market prices paid in excess of productive agricultural land prices. As a result of several major changes to the law in 2008, all or some non-productive land enrolled in Green Acres before May 1, 2008 may either be withdrawn or grandfathered into the program by farmers. If this land remains in Green Acres, it continues to receive the deferment until it no longer qualifies.

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. Legislation has enacted a phase-out of limited market value, which will expire for the 2009 assessment and beyond.

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. In addition to the State of Minnesota’s 6.875-percent tax on taxable purchases within the state (sales tax) and outside the state (use tax), Dakota County applies an additional 0.25-percent tax to taxable purchases within the County (sales tax) and outside of the County (use tax).

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 Classification-The Assessor determines the classification, or use, of each parcel. For instance, property may be residential homestead (owner-occupied), residential non-homestead, agricultural, or commercial. Each classification is taxed at a different percentage of market value.

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 (6.875%) levied on the sale of goods and services that is deposited into the state general fund. In addition to the State of Minnesota’s 6.875-percent tax on taxable purchases within the state (sales tax) and outside the state (use tax), Dakota County applies an additional 0.25-percent tax to taxable purchases within the County (sales tax) and outside of the County (use tax).

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

Tax Increment Financing (TIF)-A local development tool used by cities and other development authorities to finance redevelopment of blighted areas, economic development, moderate and low-income housing, and other projects by “capturing” the additional property taxes generated by the project to finance up-front development costs. Minnesota Statutes 469.174 thru 469.176 authorize the use of TIF by development authorities.

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