Question: My home’s value just went up by 30%! Does that mean my property tax will go up by 30%?

Answer: No. Higher assessed value (AV) does not necessarily translate into higher property taxes.

Here’s the equation: Property Tax Rate X Assessed Value = Property Tax Paid

On the surface and looking at the equation, you’d think that if the assessed value (AV) of your home goes up by 30%, then your property tax will also go up by 30%.  But in Washington State, property tax revenue is controlled on the right side of the equation: property tax paid.

Taxing jurisdictions in Washington (including Kenmore) are subject to a 1% limit on the right side of the equation, meaning that the total amount of property tax revenue a city or other government can collect can only grow by 1% per year.*  So even if your and everyone else’s assessed value goes up by 30% from one year to the next, the property tax you pay should go up by no more than 1% (excluding some exceptions). 

There are some exceptions to the 1% property tax growth limit:

• Banked Capacity. A government can increase the property tax by more than 1% if they have “banked capacity,” meaning they didn’t take the full 1% increase in prior years and “banked” it.  They can use the “banked capacity” in future years if they choose.  In Kenmore, we’ll be tapping into banked capacity in 2023. The City will take the 1% allowed increase plus 0.9% of banked capacity, for a total of a 1.9% increase. So the average property owner in Kenmore should see a 1.9% increase in the city portion of their property tax in 2023.
• Voter-Approved Increases. Governments may exceed the 1% limit with a voter-approved ballot measure. For example, on last month’s ballot, King County voters said Yes to increasing what they pay to for the Conservation Futures Levy, so that portion of your property taxes will see more than a 1% increase.
• Above Average.  If your property increases in value by more than the average increase in your jurisdiction, then you will see more than a 1% increase in your property tax.  For example, if your property value went up by 40% and the average increase in your jurisdiction was 30%, then you will likely see about a 10% increase.  This scenario is more likely to play out with county-wide and sate-wide property taxes. This year, assessed values (AV) on the eastside of King County increased by a higher percentage than they did in other parts of the county.  In that case, eastside property owners will probably see more than a 1% increase in the county portion of their taxes. The same goes for state-wide taxes—if your home’s value went up higher than the state-wide average increase, then you will see more than a 1% in the state portion of your property tax.

Like many things in government, property tax isn’t as easy to understand as we’d like it to be. But next time you receive a notice of your home’s value in the mail, remember that an increase in your home’s value does not necessarily result in a corresponding increase in your property tax.

For more information about property tax, including how your home’s value is assessed, property tax rates, exemptions for seniors, and how you can appeal the assessed value of your home, go to: https://kingcounty.gov/depts/assessor.aspx

*New property tax from new construction is not included in this equation and is a very small fraction of total property tax collected.