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Ad Valorem Tax (Property Tax), What's That?

Property tax, also known as ad valorem tax, is an annual tax paid by property owners to local government. Property tax collections in Oklahoma totaled $2.2 billion in 2011 and are the single largest source of local government revenue. Oklahoma’s per person property taxes are among the lowest in the nation and less than half the national average.

Property taxes are based on a property’s value, its assessment ratio, and the millage levy.

  1. Property valuation is determined by county assessors. The assessed value cannot be increased by more than 3 percent in any year, unless the property is sold.
  2. The assessment ratio is a percentage of a property’s assessed value. Counties can set assessment ratios for different kinds of property at between 10 and 15 percent.
  3. Mills are then applied to assessed valuation, up to maximum levels set by the Oklahoma Constitution. A mill is $1 in tax for every $1,000 in taxable value. Various local governments are also allowed to issue bonds paid for with additional mills if approved by popular vote.

For example, say a house has an assessed value of $100,000, and the assessment ratio used in the county is 12 percent. Multiplying $100,000 x 12% gives a taxable value of $12,000. A homestead exemption (typically $1,000) is then subtracted, to give a net taxable value of $11,000. This is then multiplied by the millage rate, where each mill is one-tenth of a cent per dollar. For example, if the millage in the area is 110, the final property tax bill equals $11,000 time 0.110, or $1,210.

Oklahoma has various property tax exemptions that may reduce this amount further.

With passage of State Question 766 in 2012, Oklahoma exempted all intangible property from the property tax. Previously only “centrally-assessed” businesses (primarily large telecommunications, utility, and railroad companies) had been charged property taxes on intangible property.

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