Anchorage property tax bills are hitting mailboxes. Here’s how to read them.

Property tax bills are hitting mailboxes across Anchorage.

Most property owners can expect bigger bills this year, surpassing past payments that were likely already significant.

Anchorage has a high property tax burden, compared to the rest of the nation, though its overall tax burden is low.

The property taxes do a lot of heavy lifting. The city lacks a sales tax, while support from the state of Alaska has fallen significantly over the decade.

Property taxes help pay for schools as well as police, fire and road maintenance, among other services.

The bills affect property owners who owe the tax, and renters who indirectly pay it in the form of rising rent.

A driving force for this year’s residential property tax increases are rising home values. This year, the assessed value of single-family homes jumped by more than 9%.

The tax bills are generally rising by a much smaller rate, since a variety of factors are used to calculate the bills, municipal officials say.

The average value of a single-family home in Anchorage is worth almost $450,000 this year, as assessed by the municipality.

If the home receives a residential exemption — as most do — property owners in most of Anchorage will owe a little over $6,000 in property taxes. That number may differ for Anchorage homeowners in certain tax districts, however.

That’s about 6% above what the same household owed last year.

So how is the bill determined?

And why are the payments so high?

The property tax burden

Anchorage property tax payments rank around the top 10% of counties nationally, according to Tax Foundation data, said Nolan Klouda, head of the University of Alaska Center for Economic Development.

But the overall tax burden of Anchorage residents is low, since the city has no sales tax, and the state has no income or sales tax, said Klouda, a member of the municipality’s Budget Advisory Commission.

The property tax pays for well over half of the municipality’s budget, and a good chunk of the Anchorage School District’s budget.

The property tax plays a much larger role than it once did, said Assembly member Anna Brawley, co-chair of the Assembly Budget and Finance Committee.

The state today pays for a fraction of the municipal budget, following a sharp decline in state support over the last decade, Brawley said.

And while many people think their property taxes support municipal services only, close to half goes to the school district, Klouda said. State funding for the school district also remained largely flat for years.

The city expects to collect about $620 million in property taxes this year.

Of that, $360 million will pay for general government services.

The remaining roughly $260 million in property taxes will support the school district.

Housing assessments jump

The city’s website provides a sample tax bill for the current year, with helpful descriptions for reading it.

In a first step for calculating each bill, the municipality assesses the value of more than 94,000 commercial and residential properties in Anchorage.

The municipality mails the assessments in January on the so-called “green cards.”

The assessments are legally required to keep up with market values, said Jack Gadamus, the municipal assessor.

Still, the assessments can lag behind market values, as seen in the municipality’s 2024 property appraisal report.

For this year’s taxes, the average value of a single-family home is $449,667.

That’s up from $411,105 the year before, Gadamus said.

That 9.4% jump in the average assessed value is well above the previous year’s roughly 2% increase, he said.

Anchorage home prices have jumped rapidly in recent years, largely due to a shortage of new housing, a national problem. The shortage has also been blamed for higher rents.

The limited amount of new housing and commercial development, and the city’s long-term population decline, means remaining Anchorage residents bear an increasingly larger share of the property tax burden, Brawley said.

How property assessments are determined

The city generally uses different assessment methods for different types of properties, Gadamus said.

The “cost approach” typically is used for single-family homes, the most common residential property in the city.

Under that method, land values are determined by looking at comparable sales. Next, the house value is determined by estimating the cost to replace it, with existing wear and tear deducted, he said.

The house and the land values are added together, producing the assessed value.

Municipal assessors also review comparable home sales to help determine the value of a single-family home, he said.

Most of the work is done at a desk, using an appraisal software program, he said. But assessors periodically inspect properties in-person, usually from the outside, he said.

“There’s no way we can look at each property individually (each year),” Gadamus said.

Assessments can be challenged by homeowners. The homeowners often seek a smaller value, leading to a smaller tax payment. The deadline for filing that appeal is around mid-February.

Property taxes generally don’t rise as much as the assessments, municipal officials said.

That’s because a variety of factors affect the tax bills.

The 2022 tax year also saw a big increase in the assessments, Gadamus said. But the taxes people owed rose by a much smaller amount, he said.

“Our goal is to get to market values because we have to,” he said, referring to the law.

Assessors are not thinking about trying to generate more revenue, he said.

How a home’s taxable value is determined

A home’s taxable value is generally the assessed value, minus exemptions, Gadamus said.

The exemptions are sizable.

The residential exemption is the most common deduction. It applies to properties occupied by homeowners.

Once granted, it renews automatically each year, unless the property changes hands or the property use changes, such as from a property owner’s primary residence to a rental.

“We are reviewing exemptions,” Gadamus said. “Our goal is to ensure property owners who qualify receive them, and those that don’t, don’t receive them.”

The property owner needs to report the change of ownership or change of use within 30 days to the city, Gadamus said. If there’s a failure to report, a property owner may need to pay the cost of past exemptions that should not have been granted, he said.

The city issues more than 50,000 residential exemptions, said Glenn Cipriano, municipal treasurer.

Under the exemption, up to $75,000 is removed from the assessed value.

Voters last year boosted that amount from $50,000, which helped hold down tax payments last summer.

Some of the other exemptions, for seniors and disabled veterans, top out at $150,000.

One of those can be applied atop a residential exemption, Cipriano said.

Property owners who can combine the maximum senior and residential exemption would only owe taxes on half the value of a $450,000 home.

The math behind the mill rate

The mill rate is used to calculate the property tax bill.

It’s somewhat similar to a sales tax in that way, Brawley said.

The rates are determined formulaically. They are set after the budget is established. Property assessments are factored into the equation.

Services such as police, fire and the school district have their own mill rate, adding up to the total mill levy.

Services that many people support have the biggest mill rates, such as police, fire, schools and road maintenance, said Klouda, with the UA Center for Economic Development.

City entities like parks and recreation and Anchorage building safety, which enforces building codes, have small mill rates.

Anchorage has many different total mill rates, depending on where a property is located. The property location affects the services they receive, as shown in an online municipal map with the mill rates for each area.

Mill rates are down this year because property values are higher, and because the budget is flat, not counting for inflation, Brawley said.

The lower mill rates helped temper the rise in taxes.

The mill rate in most of Anchorage is 16.145 this year. That’s down from last year, when it topped 17.

To figure out your taxes, you divide the mill rate by 1,000.

That gives you .016145.

You multiply that number by your house’s taxable value to get your tax bill.