The levy limit is the maximum amount a community can raise through property taxes in any given year. It is based on the previous year's limit plus allowable increases, including the annual 2½ percent increase, new growth, and overrides.

The levy limit will always be below or at most equal to the levy ceiling of 2½ percent of the total full and fair cash value of the community's taxable real and personal property. A community may also levy above the levy limit or ceiling by way of an exclusion.

An override is a voted increase in the levy limit and cannot raise it above the community's levy ceiling. When approved, an override permanently increases the community's levy limit and requires majority approval by the electorate.

Exclusions allow a community to assess taxes above its levy limit or levy ceiling for certain capital projects or specified debt service costs. A debt exclusion applies to debt service, while a capital outlay expenditure exclusion applies to capital project costs. Unlike overrides, exclusions do not become part of the base used to calculate future levy limits.

An underride reduces a community's levy limit. The underride amount is subtracted from the levy limit, permanently reducing the base used to calculate future levy limits. Underrides require majority approval by the electorate.

A tax rate is set after the community's levy limit, the amount needed to be raised through taxation and property assessments reflecting full and fair market value, is finalized.

Tax rates can increase due to higher amounts needed to be raised through taxes, declining property assessments, overrides or exclusions, new growth, use of previously unused levy capacity, or changes to the prior year's tax base through the abatement process.

Until a tax rate is finalized, the community cannot send an actual property tax bill. Setting the rate promptly allows bills to be issued on schedule and helps maintain municipal cash flow. Delays may require borrowing or create additional billing expenses.

A classification hearing is held annually to determine whether to shift some of the property tax burden from one property class to another. The Town Council holds the public hearing after assessments are finalized and before the tax rate is set.

Options may include reallocating portions of the tax obligation among property classes. Adopting one or more of these options may result in multiple tax rates.

Yes. The Assessors must finalize all assessments for the fiscal year before the Town Council votes on allocating the tax burden. This allows the allowable shifts and their impacts to be accurately calculated.

Taxable property is categorized as Residential, Open Space, Commercial, Industrial, or Personal Property. A split tax rate generally means using different rates to shift a portion of the tax burden from Residential and Open Space property to Commercial, Industrial, and Personal Property.

The Assessors determine the amount budgeted for the overlay, which covers abatements and exemptions. Estimated receipts are determined by the officials responsible for budget estimates, with input from the municipal financial team.

The overlay worksheet includes a three-year history of the account, while estimated receipt projections generally consider prior actual revenues and anticipated changes for the coming year.

These are amounts included on the tax rate recap to fund certain expenditures or cover deficits. Examples include debt service, court judgments, snow and ice deficits, state and county charges, Cherry Sheet offsets, overlay allowances and revenue deficits.

No. A community that chooses not to levy to its full capacity in one year does not lose that capacity in future years. The community may later levy up to its new full limit, which can result in an overall levy increase greater than 2½ percent.

The total assessed value of all single-family parcels is divided by the number of single-family parcels to determine the average value. That value is multiplied by the residential tax rate and divided by 1,000 to determine the average single-family tax bill.

Proposition 2½ regulates the community's levy limit; it does not limit an individual property owner's tax bill to a 2½ percent annual increase.

Individual bills may increase by more than 2½ percent due to unused levy capacity, new growth, overrides or exclusions, property revaluation, new construction, or changes in the real estate market.