How Can the Tax Levy Be Increased?

The levy limit is increased from year to year as long as it remains below the levy ceiling. Permanent increases in the levy limit result from:

• Automatic 2.5% increase: Each year, a community’s levy limit automatically increases by 2.5% over the previous year’s levy limit. This does not require any action on the part of local officials; the Department of Revenue calculates this increase automatically.
• New Growth: A community is able to increase its levy limit each year to reflect new growth in the tax base. Assessors are required to submit information on growth in the tax base for approval by the Department of Revenue as part of the tax rate setting process.
• Overrides: A community can permanently increase its levy limit by successfully voting an override. The amount of the override becomes a permanent part of the levy limit base.
• Please note: Debt exclusions, capital outlay expenditure exclusions and overrides are all often referred to as “overrides” and enable a community either to permanently increase its levy limit or temporarily levy above its levy limit or levy ceiling. An override enables a community to permanently increase its levy limit, while an exclusion only allows for a temporary increase in taxes over a community’s levy limit.

Summary

In summary, the levy limit can increase from year to year in these ways: automatic 2.5% increase, new growth and overrides. Once the levy limit is increased in any of these ways, the increased levy limit amount becomes the base upon which levy limits are calculated for future years.