Tax Capacity Value
The "tax capacity value" is determined by multiplying the taxable market value of the property by the statutory percentage rates (also called class rates) for the specific classification(s) / use(s) on the property. Minnesota has many class rates and those rates can be changed only by the State Legislature.
Example: The class rate for homestead property is significantly less than the class rate for commercial or industrial property. The classification of the parcel determines what percentages are to be used to determine the total tax capacity of each parcel in Clay County.
Tax Capacity Rate
The "tax capacity rate" is determined annually by the county Auditor. This rate is multiplied by the "tax capacity value" to arrive at the property tax.
The "tax capacity rate" is a result of dividing the property tax levies submitted by the taxing authorities (school district, county, city / township, metropolitan authorities, etc.) by the overall / total tax capacity value for that taxing jurisdiction.