What does the formula 'Assessed Value/Market Value' represent?

The formula 'Assessed Value/Market Value' represents the Assessment Level, which is a key concept in property taxation. The Assessment Level indicates the proportion of a property's market value that is being assessed for taxation purposes.

When this ratio is calculated, it helps to determine how consistently properties are assessed within a particular jurisdiction. For example, if the assessed value of a property is $100,000 and its market value is $200,000, the assessment level would be 0.5 or 50%. This suggests that the property is assessed at half of its actual market value.

Understanding the Assessment Level is crucial for assessors, as it provides insight into whether properties are being taxed equitably and can help in making adjustments to maintain fairness in the property tax system. It can also inform property owners about how their property assessments compare to the overall market.

In contrast, the Effective Tax Rate relates to the percentage of the property's assessed value that must be paid in taxes, while the Nominal Tax Rate is the stated tax rate before any adjustments. Tax Due refers to the final amount payable based on the assessed value and the applicable tax rate, which is derived from the assessment level but is not defined by the ratio itself.