How is the Assessed and Taxable Values calculated?

Assessed Value

All assessed values are calculated according to the State Tax Commission standards. This value is shown as the State Equalized Value (or SEV) on your tax statement. SEVs are based on mass appraisal techniques which take into account the current cost to replicate your home and then depreciates that cost based on the age of the structure. That value is then adjusted to market value by utilizing sales within the particular area over a two year sales study. 

Each year the Assessor is required by law to review the sales in the previous two year sales study to conclude assessed values at 50% of market value. 

Taxable Value

The term Taxable Value was used in the 1994 constitutional amendment known as Proposal A to replace SEV in the property tax equation to calculate property tax bills. The first step in the process of determining Taxable Value is to calculate the Capped Value of every parcel of assessable property using the following formula:


Prior Taxable Value – Taxable Value of Losses X Lesser of 5% or CPI Multiplier + Taxable Value of Additions = Capped Value

CPI is the Consumer’s Price Index (Inflation rate) as calculated by the State of Michigan each fall. The legislature has defined Taxable Value to be the lesser of SEV or Capped Value. Assessors are required to annually calculate a Capped Value for each individual parcel of real property. The Capped Value is then compared to the SEV of that property, and the lower of the two will be its Taxable Value upon which taxes are levied. The year following an eligible transfer of ownership, the SEV of the transferred property set in that year is its Taxable Value.

Show All Answers

1. What is the difference between the Assessed Value and Taxable Value of my home?
2. How is the Assessed and Taxable Values calculated?
3. I recently purchased a home. Will my taxes on this property be about the same amount as the prior owner’s taxes?