Assessed Value is defined by state law as 50% of the market value of the property as of December 31st of the preceding year. Taxable Value is derived from a formula created by Proposal A in 1994, designed to limit tax increases at the rate of inflation. (Increases in millage rates may also increase taxes). The formula is:
(Previous Taxable Value - Losses) x CPI + Additions = Current Year's Capped Value
The taxable value is the lesser of the Capped Value or the Assessed Value.
Losses are defined as physical changes to the property that result in a loss of value - i.e. demolishing a garage.
CPI is the consumer's price index as calculated by the State of Michigan each October.
Additions are defined as physical improvements to the property that add value and were not previously assessed. i.e. adding a deck.