School taxes are a very local form of tax spent on schools in the area. They are more formally known as a school district income tax or school district property tax. They apply to a specific area of a county known as a school district. School taxes do not exist in all states, and in those where they do, they may only apply in particular districts. Usually the citizens of a school district must vote in favor of a tax before it can be imposed.
For a school tax based on income, the system is fairly simple--citizens pay a set proportion of their income in taxation. In most cases this can be collected through employer witholdings. There are two main variants of this tax. The "traditional" method is based on earning after allowable deductions, similar to federal taxes, while the "earned income method" is based solely on income and doesn't allow for any deductions.
With a school district property tax, the tax paid is based on the value of a citizen's property. This in an ad valorem tax, meaning it is based on value rather than quantity. There are three main types of property tax: the value of land; the value of land taking into account improvements such as buildings; and personal possessions, which can cover high-value items such as vehicles or jewelry. The type assessed depends on a municipality's tax laws.
The amount a citizen pays is based on two factors: the value of his home and the tax rate. Usually, the tax rate is described as per mille, meaning the number of dollars to be paid for each thousand dollars in home value. This rate is also referred to as the millage rate. Per mille and millage are equivalent to percent and percentage, but involve breaking amounts down by a thousandth rather than a hundredth.
The tax rate that applies varies from district to district. Changes in the rate usually must be approved by citizens in a vote often conducted at the same time as elections. The tax rate will depend on how much local officials believe is needed to fund schools in the district.
The value of the home used to calculate taxes is based on an appraisal by local officials. The precise method can vary from location to location. Some of the most common methods are to consider the price a homeowner paid for a property, to consider the sale price of similar properties that have been sold recently, and to consider how much it would cost to replace a home if it were damaged or destroyed. Usually a district will use a consistent method of appraising values and have an appeals process for homeowners who wish to challenge an appraisal.