Define Property Tax Levy

Tax rates for levies are adjusted as necessary to raise a set amount of revenue for a public debt obligation.

A levy is a type of property tax with a variable rate. Unlike rate taxes, which are charged as a consistent percentage of property value, levies can vary according to revenue needs or debt obligations. Many levies are voter-approved and may be limited by state laws.

Levy vs. Rate Tax

A property tax levy is distinct from a property tax rate. In the case of a levy, the amount of revenue to be raised is calculated first, and the tax rate, as a percentage of property value, is adjusted as necessary to meet this revenue level.

Bonds and Levies

Levies are usually a tax used to guarantee a state bond. When a state or local government issues a bond, taxpayers are essentially borrowing money to finance projects and operations. The money to repay these bonds with interest is raised by levying a property tax at the rate necessary to repay the state's debt obligation.

Levy Limits

In most jurisdictions, law limits the amount that can be levied. Governments, in some states, cannot take on debts that would allow property taxes to reach a certain level. Additionally, some school levies are limited by what is called a "levy lid"---a maximum level of funding that government is allowed to ask of voters.

References

• Purdue University: Overview of the Indiana Property Tax
• Citizens for Better Schools: What Is a Levy and What Is a Bond?
• Funding Washington Schools: Local Levies and Bonds---the "Enhancements" to Basic Ed?

Resources

• Illinois Dept. of Commerce and Opportunity: Illinois Property Tax Rate and Levy Manual
• Investopedia: Mill Levy