This article is a basic overview of the Town’s tax rate and is intended to help explain the components of the Town’s tax rate and how it is set each year. At the end we’ll also look at the total tax rate, or how much we pay for every $1,000 of property valuation, that appears on your semi-annual tax bills.
The Town tax rate is determined by the New Hampshire Department of Revenue Administration (DRA) and considers three main components:
Total appropriation: This is the total Town budget, including warrant articles. Once approved at Town Meeting in the spring, it becomes the appropriation for the year. For 2021, the total appropriation was $2,332,271.
Total expected revenues: The Town receives revenue from many different sources during the year, ranging from the Town portion of your motor vehicle registration to the Town’s portion of the State’s Rooms and Meals Tax. For 2021, we expect total revenue of $979,571.
Adjustments: There are two main adjustments added to our appropriation when setting the tax rate. The first are Veterans Credits – $55,000 for 2021. The second adjustment is called the Overlay, which is an allowance for abatement of taxes: $12,838 for 2021.
Money Raised from Taxation
The first step in calculating the tax rate is to determine how much money the Town will need to raise in taxes. This is done by taking the total appropriations voted at Town Meeting (budget plus warrant articles), subtracting total expected revenues and use of the Fund Balance ($51,000 in 2021), adding Veterans Credits, and finally adding the overlay to arrive at the total amount of money to be raised in taxes.
Once the DRA knows the amount of money to be raised through taxation, which for 2021 is $1,359,538, the next step is to determine the tax rate per thousand dollars of the town’s valuation.
Tax Rate Calculation
The tax rate is calculated using a simple formula. This formula is:
Tax Rate =
Amount to be Raised by Taxes
divided by
Total Assessed Value of all taxable property in town
times 1,000 (because we always present the tax rate in “dollars per thousand dollars of valuation)
Or, using actual figures for 2021
2021 Tax Rate of $4.28 per thousand dollars of valuation =
$1,359,538 divided by $317,595,538
times 1,000
But keep in mind that $4.28 per thousand is just the Town tax rate. The School District and the Fire Department also have budgets and therefore tax rates, plus the State collects a State Education tax and Merrimack County collects a county tax, both using a tax rate. Together, those five tax rates create the total tax rate that you see on your semi-annual property tax bills.
For 2021, the total tax rate is $21.42 per thousand, a decrease from 2020 of $0.43, or 2.1%. The breakdown of that total rate is:
Town of Andover: $4.28
Andover School District: $12.39
Andover Fire Department: $0.51
State Education: $1.85
Merrimack County: $2.39