(1) The amount of the credit is determined by applying a factor known as "the relief multiple" to the amount of property taxes that would otherwise be owed by class four residential property owners on $20,000 of market value of their qualifying principal residence for the elementary school mills levied under 20-9-331, MCA, the high school mills levied under 20-9-333, MCA, and the state school equalization mills levied under 20-9-360, MCA. This calculation requires determination of, first, the value of the relief multiple; and, second, the amount of property taxes that would be owing on $20,000 of market value of class four residential property for the school mills. The product of these two amounts determines the individual income tax credit amount.

(2) Unless amended by the Legislature, the relief multiple is zero. The relief multiple for tax year 2007 was 3.6.

(3) The amount of property taxes owing on $20,000 of market value must also take into account any exemptions that apply, including the homestead exemption percentage provided in 15-6-222, MCA, and the taxable valuation rate provided in 15-6-134, MCA.

(4) For 2007 the homestead exemption was 33.2%, meaning that only 66.8% of the market value of class four property was subject to property tax, the taxable valuation rate for tax year 2007 was 3.07%, and 95 basic school mills were levied. These statutory parameters resulted in a net property tax of $38.96 being levied on $20,000 of class four residential property for tax year 2007, calculated as follows:

 

Market value:	$20,000
Taxable market value factor:	66.8%
Taxable market value:	$13,360
Taxable valuation percentage:	3.07%
Taxable valuation:	$410.15
Multiply by 95 mills:	0.095
Tax credit per unit of relief multiple:	$ 38.96

 

The tax credit for tax year 2007 was $140 when rounded to the nearest whole dollar (38.96 x 3.6= 140).