Reviewed Date: 11/23/2022
Certified Tax Rate
After completing a general property reassessment, a city must determine the tax rate on the new total assessment that would produce no more than the amount of property tax revenue generated the preceding year. This rate is called the certified tax rate.
To reflect extraordinary assessment changes, the municipality’s governing body may adjust the calculated certified tax rate according to a method approved by the state board of equalization. The city must submit for review a new, tentative tax rate and supporting calculations to the executive secretary of the state board of equalization. The municipality must then consider the board official’s report before fixing a certified tax rate. When there is an excessive adjustment, the board shall order recapture in the following year if the certified tax rate has been overstated because the appeals adjustment was overestimated. A public hearing is necessary if the city exceeds the recapture rate.
A city may not take an automatic windfall of increased revenue from a reappraisal. However, if a city wants to increase its revenue after a reappraisal, the municipality must formally advertise its intention to exceed the certified tax rate in a newspaper of general circulation in the county before the council votes to adopt a tax rate that is higher than the certified tax rate. The municipality shall provide proof of the publication to the State Board of Equalization within thirty (30) days of publication. T.C.A. §§ 67-5-1701–1703.
Article II, Section 28, of the Tennessee Constitution provides for using the following percentages of full value to determine assessments:
- Public utility real and tangible personal property – 55 percent;
- Industrial and commercial real property – 40 percent;
- Industrial and commercial tangible personal property – 30 percent;
- Residential and farm real property – 25 percent; and
- Other tangible personal property – 5 percent (T.C.A. §§ 67-5-801, 901).