Are you wondering, what are Madison WI property taxes like or maybe you’re wondering what areas you can save a bit on property taxes surrounding Madison. We’re gonna cover all of that right now.
Today we are talking about Madison WI property taxes. Wisconsin has high property taxes. We are fifth or sixth in the country, depending on which publication you ask. According to “Wallet Hub” we are fifth but according to “Motley Fool” we are sixth, so who knows for sure but we are definitely up there. We are in line behind New Jersey, Illinois, New Hampshire, Connecticut, and we’re constantly battling it out with Vermont.
One of the things we need to discuss before diving into the particulars of Madison WI property taxes, is how property taxes are determined. Every municipality has what’s called a tax rate or some people call it a mill rate; in this area we refer to it mostly as a mill rate. Simply put, the mill rate is the rate at which a municipality is taxed in order to meet their budget based on how much total property value in the municipality is taxed. So, all of the assessments across the whole municipality added up, times the mill rate should meet the municipality’s budget. Each property is individually assessed by the city assessor to determine a value and then that value times the mill rate is how you figure out your property taxes for the year.
How does an assessor come up with the assessed value of your home? Most cities have their own assessors, although some do hire a third party. In either case, an assessor looks at what the area real estate market has done recently, they consider comparable sales, as well as any improvements you’ve made to the home. An assessor will look at permits you’ve pulled to see, for example, if you’ve added a deck or finished the basement as those are things that help determine the assessed value of your home. Once the value is calculated, the city takes the mill rate and multiplies it by that assessed value to get each resident’s total yearly tax bill. The magic behind Madison WI property taxes!
Each municipality is a little bit different on how close they keep their assessed value to how much the property is actually worth. I notice Madison generally does a really good job of keeping the assessed value and the actual market value close. Typically, the smaller townships and rural areas tend to have more discrepancy between the actual market value and the assessed value. I find the assessed value tends to lag behind the actual market value meaning, if the market is going up the assessed value is going to be lower, if the market’s going down it’s going to be higher. The rural communities are just a little bit slower at getting these discrepancies corrected to reflect the actual market value.
How does this discrepancy between assessed value and actual market value affect Madison WI property taxes? Let’s talk about the average Madison WI property taxes. The median sales price in Madison is $325,000 but, as we mentioned, the assessed value is typically lagging behind a little bit. Considering this fact, let’s use $300,000 because home prices in the Madison area are rising right now meaning the assessed value would be a little lower than the actual market value. The Madison WI property taxes mill rate is $22.56 per $1,000 of assessed value. Using the calculation we discussed previously (mill rate times assessed value) makes the average Madison WI property tax bill around $6,800 per year.
One of the questions I get asked quite often is, “Who has the highest property taxes in the area?”. The truth is, Madison WI property taxes are actually lower than many of the surrounding suburbs. This is mainly driven by the school districts as well as how fast the community is growing. Currently, the city with the highest property taxes in Dane County is Sun Prairie. Sun Prairie has a tax mill rate of $24.93 per $1,000 of assessed value. Again, using that average home price of $300,000 times the mill rate of $24.93, the average property tax bill in Sun Prairie is around $7,500 per year. Not a huge discrepancy between Sun Prairie and Madison WI property taxes, about $700 more a year in Sun Prairie compared to Madison. As we mentioned, some factors that contribute to this higher number are Sun Prairie’s immense growth over the last 10-15 years (they’re currently the biggest Madison suburb) and the demand for schools in this area. Sun Prairie just built a new high school but it seems when they complete one school, another new one needs to be built. They just keep growing!
Some of the other Madison WI property taxes that tend to be a little higher include Cottage Grove as well as Verona. Verona, much like Sun Prairie, just built a huge, brand new high school. We’re currently in the Verona school district so we’re feeling that a little bit! Also, a house in the Madison municipality but with Monona Grove schools (the Monona and Cottage Grove combined school district) or with Sun Prairie schools
An equally common question I’m asked in regards to Madison WI property taxes is “Who has the lowest taxes?”. Generally speaking, the smaller townships around Madison have the lowest taxes. Let me explain, a lot of the suburbs, Verona, Middleton, Sun Prairie, Cottage Grove, have townships just outside of their cities or villages. For example, the town of Verona’s mill rate is $18.23 per $1,000. Based on that $300,000 assessed value their taxes are about $5,550 a year. Quite a bit less than Madison with Madison schools, almost $1,300 less. There are some other townships that are even lower but that’s just one example of where you can find lower Madison WI property taxes.
Like everything in life, to achieve the lower Madison WI property taxes there are some things you’ll have to be willing to give up. For example, in many of the lower taxed townships you don’t get water supplied to the house, you don’t get sewer, you don’t have fire departments as close. All of these factors mean you will likely have to have a private septic system as well as either your own well or a shared well. These are just a few of the drawbacks, and potentially extra expenses, that come with lower Madison WI property taxes. While these factors are an additional cost to you, it may still amount to less than the additional $1,300 a year you’d pay to be in the city limits.
Some of the other notable areas with lower Madison WI property taxes are Middleton. If you’ve seen some of our other videos you know Middleton has quite a bit of new construction and most of that is in the Town of Middleton where the taxes are significantly less as compared to the City of Middleton. Some other municipalities with lower property taxes are Blooming Grove and the Town of Burke, both close to Sun Prairie so more on the east side of Madison. Westport is another really popular one up by Waunakee and Middleton, again both of these municipalities have significantly lower taxes than their surrounding cities. Springfield, to the west of Madison is another popular choice for lower property taxes. Again, these aren’t necessarily the lowest Madison WI property taxes but they are significantly less than some of the other townships or cities that are close by them.
If you have any specific cities or areas you’re looking at or if you want more information regarding what the taxes are compared to the City of Madison, please reach out. I’d love to offer any information I have available. Also, I have a document I can send with all of the tax rates for Dane County. Please reach out and let me know if that’s something that’s valuable to you. I can get that out right away!
We hope this information was helpful and gave you more insight on Madison WI property taxes. For more information on the Madison Wisconsin area, please contact me. I have a free relocation guide I’d love to share that gives you a lot of really great information about Madison. And, as always, if you have any questions regarding moving to or living in Madison please reach out!