Property Tax Terminology
CATEGORICAL AID: Aid given to a local unit of government to be used only for a specific purpose.
CIRCUIT BREAKER: See “Property Tax Refund.”
CLASS RATES: The percent of market value set by state law that establishes the property’s tax capacity subject to the property tax.
COUNTY PROGRAM AID: State property tax relief aid to counties, distributed with a formula based on needs (households on foodstamps, age of the population, number of serious crimes) and tax base equalization for counties with smaller tax bases.
EDUCATION AID: The total amount of state dollars paid for K-12 education. This aid is paid to the school districts.
FISCAL DISPARITIES: A program in the Twin Cities metropolitan area and on the iron range in which a portion of the commercial and industrial property value of each city and township is contributed to a tax base sharing pool. Each city and township then receives a distribution of property value from the pool based on market value and population in each city.
GENERAL PURPOSE AID: Aid given to units of government to be used at their own discretion. Examples are Local Government Aid and County Program Aid.
HIGHWAY AID: Motor fuels tax and license tab money the state distributes to counties, cities and townships for highways and bridges.
HOMESTEAD: A residence occupied by the owner.
INDIVIDUAL INCOME TAX: A state tax on the income of residents and non-residents with Minnesota sources of income that is deposited into the state general fund.
LEVY: The imposition of a tax, associated with the property tax.
LEVY LIMIT: The amount a local unit of government is permitted to levy for specific services under state law.
LIMITED MARKET VALUE: A state imposed limit on property value increases for the purpose of calculating property taxes.
LOCAL GOVERNMENT AID (LGA): A state government revenue sharing program for cities with low property wealth or high service burdens that is intended to provide an alternative to the property tax.
LOCAL SALES TAX: A local tax, authorized by the state, levied on the sale of goods and services to be used for specific purposes by the local government.
LOCAL TAX RATE: The tax rate usually expressed as a percentage of tax capacity, used to determine the property tax due on a property.
MARKET VALUE: An assessor’s estimate of what property would be worth if it were sold.
MARKET VALUE AGRICULTURE CREDIT: A state credit to reduce the property tax paid by agricultural homesteads to the local taxing jurisdiction.
MARKET VALUE HOMESTEAD CREDIT: A state credit to reduce the property tax paid by a residential homestead to the local taxing jurisdiction.
PROPERTY TAX: A tax levied on any kind of property.
PROPERTY TAX REFUND: A partial property tax refund program for those who have property taxes out of proportion with their income. This program is available to homeowners and renters.
SALES RATIO STUDY: A study conducted by the Department of Revenue of open market property sales, which is then compared to local assessments to ensure that local assessments adequately refl ect the market.
STATE GENERAL PROPERTY TAX: A state-imposed property tax on commercial, industrial, and seasonal recreational properties.
STATE SALES TAX: A state tax (6.5%) levied on the sale of goods and services that is deposited into the state general fund.
TAX CAPACITY: The valuation of property based on market value and class rates, on which property taxes are determined. 
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