Glossary: A

The adjustment net tax capacity (NTC) is the change in NTC between the time jurisdictions certify their levies and when tax statements are sent to property owners.

Jurisdictions use the NTC when they certify levies to calculate initial tax rates for truth-in-taxation notices to taxpayers. This happens the fall before the year taxes are paid. The NTC at the time tax statements are sent is used to calculate final tax rates. These are used to calculate the actual taxes each property owes in that year. Changes in NTC during this time may be due to value appeals by property owners or clerical errors.

A reduction in property tax for agricultural homestead land based on its market value. Agricultural homestead land and any rural vacant land that is contiguous with agricultural homestead land is eligible for the credit.

The credit is based on the property's total taxable market value minus the value of the house, garage, and surrounding acre, also known as its agricultural credit market value. The credit equals 0.3 percent on the first $115,000 of the agricultural credit market value plus 0.1 percent of that market value over $115,000. The maximum credit is $490 per homestead.

A portion of an agricultural homestead containing the house, garage, and first acre of land (HGA) that is the owner’s primary place of residence is classified as 2a.

A class 2a agricultural homestead house, garage, and first acre of land (HGA) is valued and classified separately from the remainder of the farm.

The HGA must be claimed as a homestead by the owner or qualifying relative, who is a Minnesota resident and uses the property as a primary residence.

An agricultural homestead HGA receives the same tax benefits as a residential homestead. Homestead classification may qualify the property or its owners for property tax refunds, certain exclusions, and/or special program eligibility.

Class 2a agricultural homestead HGA property has a class rate of 1.00% for the first $500,000 of market value and 1.25% for the remaining value.

Agricultural and rural vacant land that is occupied and used as a homestead by its owner, qualifying relative, or qualifies as a special agricultural homestead.

Agricultural homestead land is valued and classified separately from the house, garage, and first acre of land (HGA).

A special agricultural homestead gives homestead status to a property owner who does not live on the land, but actively farms the land or has a qualifying individual actively farm the land. To receive special agricultural homestead classification:

• The person who owns the farm must:
  • Be a Minnesota resident
  • Not claim another agricultural homestead (neither can their spouse)
  • Live within four townships or cities of the property or a combination of both
• The person who is actively farming the land must:
  • Be a Minnesota resident
  • Live within four townships or cities of the property or a combination of both
  • Own the land or be a qualifying relative

Land owned by or leased to an entity can also receive special agricultural homestead classification under certain circumstances.

Agricultural land and special agricultural homestead land include class 2a agricultural land and class 2b rural vacant land that is contiguous and under identical ownership. Property is classified as 2a agricultural land if the following conditions are met:

• At least 10 contiguous acres must be used to produce agricultural products in the preceding year (or be qualifying land enrolled in an eligible conservation program, or be used for intensive livestock or poultry confinement).
• The agricultural products are defined by statute.
• The agricultural product must be produced for sale.

Class 2b rural vacant land consists of property that is unplatted, unimproved, rural in character, and is not used for agricultural purposes.

Class 2a and 2b agricultural homestead land has a class rate of 0.50% for the first tier of market value (adjusted annually) and 1.00% for remaining value.

Agricultural non-homestead land data includes class 2a agricultural land and class 2b rural vacant land that is not part of an agricultural homestead. Property is classified as 2a agricultural land if the following conditions are met:

• At least 10 contiguous acres (or less if used exclusively) must be used to produce agricultural products in the preceding year (or be qualifying land enrolled in an eligible conservation program, or be used for intensive livestock or poultry confinement)
• The agricultural products are defined by statute
• The agricultural product must be produced for sale

Class 2b rural vacant land consists of property that is unplatted, unimproved, rural in character, and is not used for agricultural purposes.

Class 2a and 2b agricultural non-homestead land has a class rate of 1.00% of its taxable market value.

A reduction in property tax to enable agricultural use of land in areas facing development pressures. There are two credits available for this purposes: metropolitan agricultural preserves credit and non-metropolitan agricultural land preservation (also known as county conservation credit).

The metropolitan agricultural preserves credit is part of the Metropolitan Agricultural Preserve Act, which also provides a reduction in valuation and tax. The credit is available for land zoned for long-term agricultural use in the 7-county metropolitan area. The agricultural preserve status applies to the property as a restrictive covenant recorded with the property deed. There are two methods for calculating the credit. The method which gives a larger credit is used. The two methods are:

1) Multiply $1.50 by the number of qualifying acres.

2) Multiply the previous year’s statewide average township local tax rate by 105 percent, and subtract that product from the current year’s local tax rate. Multiply that new percentage by preserve’s net tax capacity.

Non-metro counties are allowed to participate in similar agricultural preservation. However, instead of the valuation and tax reduction with a credit, the non-metro preserve program just provides a credit of $1.50 per acre.

Location with buildings on agricultural land outside of a House, Garage, First Acre.

The certified dollar amount for police state aid divided by the combined total number of months worked by all eligible peace officers for departments applying in a reporting year.

A report of counts, valuations, and acreages for types of property within a county. The data is reported by Unique Taxing Area (UTA) with subtotals by city/township, school district, and county total.

All property is valued at its market value and classified according to its use on January 2 of each year. Any improvements made to or destruction that occurs after January 2 will be evaluated for the following year’s assessment.

The property tax calendar works on a two-year cycle, where property is assessed one year and taxes are collected the following year. The only property type that is assessed and taxed in the same year is manufactured homes assessed as personal property.

The average local net tax capacity (NTC) tax rate is the average property tax rate for the jurisdiction's local NTC levy. The rate is calculated by dividing the jurisdiction's local NTC levy by the total taxable NTC in the jurisdiction. 

Average Local NTC Tax Rate = Local NTC Levy ÷ Taxable NTC

The average local referendum market value (RMV) rate is the average property tax rate for the jurisdiction's local RMV levy. The rate is calculated by dividing the jurisdiction's local RMV levy by the total RMV in the jurisdiction.

Average Local RMV Tax Rate = Local RMV Levy ÷ RMV

The average local tax rate is the average property tax rate paid by properties for levies in a jurisdiction. The average local tax rate is broken down into net tax capacity (NTC) rates and referendum market value (RMV) rates. The general formula for an average local tax rate is: 

Average Local Tax Rate = Local Levy ÷ Tax Base