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Property tax bills

Homes in the Sunset Village-Hilldale Neighborhood, above, have an average assessment close to the citywide average of $284,868. Although each home is different, the total property tax bill for the average-value Madison home in the Madison School District rose $64 to $6,415.

For some places in Dane County, the bite of property tax increases is a bit lighter this year.

In the city of Madison, the total tax bill for the average assessed home is rising $64, or 1 percent, to $6,415, the lowest percentage increase since 2014.

And that’s before the state lottery credit and another credit for building improvements on property are deducted, which means many taxpayers will pay less than they did last year.

Overall, sustained growth and state caps on municipal taxes and school revenue continue to constrain spending and hold down most bills in the county, officials said.

As a result, the Madison School District, historically the biggest driver of a person’s property tax bill, increased taxes on the average home, now valued at $284,868, by just $1.97, or 0.06 percent. Dane County taxes dropped by $2.33, or 0.28 percent, and for the second straight year, the state took out nothing.

The school district said higher-than-estimated property values influenced by new construction and property coming out of tax incremental financing (TIF) districts contributed to the minimal increase. In the county, the growing tax base and levy limits, a levy reduction brought by a new state aid formula and no growth in debt payments led to the decrease.

City taxes in the bill for the average home rose $67.18, or 2.67 percent, and Madison Area Technical College taxes increased by $9.34, or 3.57 percent.

But the school tax credit lowered the bill by $12.56.

Other credits reduced the bill further. The lottery credit, for example, rose to between $120 to $220 per primary residence parcel, a 30 to 40 percent jump depending on the school district, county Treasurer Adam Gallagher said. The sum is different among school districts because districts have different tax rates.

“The lottery credit is the big thing I’m seeing this year,” Gallagher said.

After adding lottery credits, the total bill from all taxing entities on the average Madison home in the Madison School District dropped from the previous year.

But individual bills vary, driven by changes in values in municipalities and local factors like referendums or growth in the tax base, officials stressed. Some municipalities also add charges for trash collection or recycling, improvements to streets or sidewalks, or unpaid bills.

Growth helps

In Madison, real estate values rose 7.4 percent, with a 6.8 percent increase in the value of residential properties including single-family homes and apartment buildings with up to three units, and a 6.8 percent rise in the value of commercial properties, including offices, hotels and big apartment buildings, city assessor Michelle Drea said.

The value of the average single-family home in the city rose 6.6 percent to $284,868 in 2018.

New construction helped keep property taxes down, officials said.

“Madison’s property value from new construction was over 3 percent of the total property value in the city last year,” city finance director David Schmiedicke said. “The level of new construction reflects the city and region’s strong economy and helps to hold down increases in taxes on existing property.”

The net increase of $63.60, or 1 percent, in the total tax bill from all entities for the average Madison home compares to a 4.1 percent rise in 2017, and increases of 2.5 percent in 2016, 3.4 percent in 2015, 0.3 percent in 2014 and a 2.3 percent in 2013.

Breaking down a Madison tax bill

Comparing tax bills

While it’s tempting to compare tax bills from one municipality to another, communities assess properties at different rates compared to their fair market value. That makes it difficult to compare tax rates — the amount charged per $1,000 in valuation that determines one’s overall bill — between communities. But by factoring in how close to fair market value each community’s assessments are, it’s possible to compare tax rates on a typical home.

In Madison, for example, the total tax bill for a $200,000 home in the Madison School District assessed at 100 percent of its fair market value was $4,378, fifth highest in the county. The highest was $4,730 for a Madison home in the Monona Grove School District, followed by $4,712 for a Madison home in the Verona School District and $4,559 for a Fitchburg home in the Verona School District.

The lowest for a home of the same profile was $2,525 in the town of Christiana in the Cambridge School District.

Tax bills began arriving in mailboxes in mid-December. The deadline for owners to pay at least the first installment of their property taxes is Jan. 31.

The initial deadline is the same in Madison, but the city has switched from two to four installments, with the second installment due March 31, the third May 31 and the final on July 31, the latter the same date as other municipalities in the county.

Federal tax overhaul

As owners receive bills, what happens next is a bit different this year because of Congress’ major overhaul of the federal income tax system.

Due to a near doubling of the federal standard deduction — from $6,350 to $12,000 for singles and $12,700 to $24,000 for married couples filing jointly — some homeowners might now forgo itemizing deductions such as mortgage interest or local property taxes, said Jason Stein, research director for the Wisconsin Policy Forum.

The new rules may influence when some property owners who usually itemize will pay their taxes, with some shifting from the scramble to do so before Dec. 31 to the due dates allowed by local municipalities, Stein said.

But there’s more to think about, Stein stressed. The state has various state income tax credits based on property taxes paid, he said, citing the property tax rent credit, the homestead credit and the veterans property tax credit.

Before making decisions about when to pay taxes, property owners should consult an accountant or carefully study federal and state tax laws, he said.

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Dean Mosiman covers Madison city government for the Wisconsin State Journal.