The commissioners of Palm Beach County, Florida recently voted (unanimously) to cut the millage rate for property taxes from $4.715 to $4.5. Millage is the amount of tax per $1,000 of taxable property value (so a millage of $4.5 means that an owner will owe $4.5 per $1,000 of taxable property value).
There are two types of property taxes for property owners in Palm Beach County, Florida: (1) ad valorem taxes (e.g. county property taxes, school district property taxes, and hospital district property taxes) which are based on property value, and (2) non-ad valorem assessments (e.g. Solid Waste Authority fees) which are based on the cost of service.
The recent commissioner vote only affects a single type of ad valorem tax, the county-level ad valorem property tax. It does not affect other ad valorem taxes (e.g. school district property taxes) and does not affect non-ad valorem assessments.
Ad valorem taxes are computed as follows:
Taxable Value = Assessed Property Value – Tax Exemptions
Ad Valorem Taxes = Taxable Value x Millage Rates
For example, at the current millage rate of $4.715 per $1,000, the county ad valorem tax on a property with a taxable value of $500,000 would be:
County Tax = $500,000 x (0.004715) = $2,357.50
The average property in Palm Beach County increased more than 10% in value from January 1, 2022 until January 1, 2023. That means if last year your property was worth $500k, this year your property might be worth $550k. At the current millage rate, that would mean your property tax bill in November, 2023 would be:
County Tax = $550,000 x (0.004715) = $2,593.25 (a $235.75 increase over last year).
If your property is homesteaded, however, then your annual increased in assessed property value is limited to 3% which would mean you property tax would only be:
County Tax = $515,000 x (0.004715) = $2428.23 (a $70.80 increase over last year).
Compare that to a millage rate of $4.5, where that county tax would only be:
County Tax = $515,000 x (0.0045) = $2317.50 (a $40 DECREASE over last year).
For real estate investors and other property owners who aren’t homesteaded though, the decrease in millage rate may not be enough to prevent an increase in county property tax. Going back to our example of a typical property valued at $500k in 2022 which increased to $550k in value in 2023, the county tax at a millage of $4.5 would be:
County Tax = $550,000 x (0.0045) = $2,475 (a $117.50 increase over 2022).
However, even homesteaders may see a property tax bill increase when considering that this tax cut only applies to the county portion of their property taxes, not their school district, solid waste authority assessments, or other taxes.
Additionally, while it’s likely that the newly voted in $4.5 millage rate will be finalized, that outcome isn’t guaranteed. The county commissioners will hold two public hearings on September 7th and September 26th, and it’s not unusual for such hearings to change the proposed rates. Property owners are welcome to attend these hearings in order to advocate for the cuts.
References
[1] Palm Beach County – list of ad valorem taxing authorities