With municipal budget season in full swing, local governing bodies are finalizing their budgets, which in turn influences property tax rates. Here’s how the process works and what factors impact your tax bill.
What Determines Your Property Taxes?
Your property tax bill is primarily shaped by three key factors:
1. Property Value (Assessment)
Each property has an assessed value, determined by the municipal tax assessor. This is based on the estimated market value of your home.
- If your property’s assessed value increases, your taxes will likely go up, even if the tax rate stays the same.
- If you believe your assessment is too high, you can appeal it with the Mercer County Board of Taxation.
📌 Formula: (Assessed Value ÷ 100) × Tax Rate = Property Tax Owed
For example, in 2022, Hopewell Township’s total tax rate was 2.993. For a home assessed at $500,000, the tax calculation was: 5,000 × 2.993 = $14,965 in total property taxes.
2. Tax Base (Total Ratable Properties in Your Municipality)
Your taxes are also influenced by the number of taxable properties (ratables) in the municipality.
- If a major employer or business closes, the tax base shrinks, and the remaining property owners must cover a larger share of the tax levy—causing taxes to increase.
- If new businesses or developments increase the total assessed value, the tax rate can decrease, spreading the tax burden across more taxpayers.
3. Costs (Municipal, County, and School Budgets)
The total tax levy is the amount of money that local governments need to raise from property taxes to fund services.
- If the town, county, or school district spends more than projected, they may need to increase the tax levy, causing property taxes to rise.
- Key cost drivers include:
✅ Employee salaries & benefits (teachers, police, municipal staff)
✅ Infrastructure projects (road repairs, stormwater management)
✅ Rising costs (fuel, healthcare, utilities, insurance)
How Are Your Property Taxes Allocated?
Once your total property tax bill is calculated, it is divided among five key components:
Taxing Entity What It Funds Hopewell Valley Regional Schools Public schools (largest portion of tax bill) Mercer County Countywide services & infrastructure Municipal Government Local services (police, public works, administration) Local Open Space Tax Land preservation & conservation efforts Fire District Local fire protection services
Each of these entities sets its own budget, determining how much revenue must be collected through property taxes (the tax levy).
Once budgets are finalized, they are submitted to the County Tax Board, which determines the total amount that must be collected and calculates the tax rate based on total assessed property value.
📌 Formula: (Total Tax Levy) ÷ (Total Assessed Property Value in the Municipality)= Tax Rate
Why Do Property Taxes Change?
Even if the tax rate stays the same, your tax bill may still increase if:
- Your home’s assessed value rises.
- There are fewer taxable properties to share the burden.
- Government spending exceeds projections.
Can You Appeal Your Property Assessment?
If you believe your property assessment is incorrect (as noted in the February tax notice), you have the right to file a tax appeal with the Mercer County Board of Taxation. Appeal instructions and applications are available here.
Who to Contact With Questions?
For specific questions about property taxes, contact:
- Your municipal tax assessor
- The Mercer County Board of Taxation
- A property tax attorney
Want to Learn More? Watch this video about property taxes.
