How Reassessments Can Increase Your Property Taxes: And What To Do About It

Assessments & Property Taxes

Every year thousands of people fall prey to the whims of their local assessor. Even if you've made no improvements to your home, and even if local levy limits stay the same, your property tax bill can still go up.

Because Wisconsin has levy limits in place on property tax collections, local governments have almost no power to increase tax collections unless voters approve a referendum. As a consequence, the mill rate is mostly meaningless. Municipalities in other states may have direct control over this tax rate, but in Wisconsin, tax collections can only increase when there is Net New Construction.

Net New Construction (NNC) is the difference between the value of all new real property and the value of all destroyed real property. If that difference is positive––that is, if there is more construction than destruction––then the government is allowed to tax that new real property. But take note: this has no effect on anyone else's property taxes. The new tax collections come only from that new property.

But something funny can happen to property tax bills even if your local government is fiscally responsible, and even if there's no NNC in your area. This is because your local assessor creates new assessments every year which can change how property tax burdens are distributed among properties.

What matters for individuals' property tax bills isn't the mill rate, NNC or the value of your property, but the value of your property relative to everyone else's.

A Simple Scenario

Imagine you live in a town with just two properties: yours and your neighbor's. Both of you have the exact same home on identical pieces of land, which both of you bought for $300,000. Since both properties were purchased at that price, that is also their assessed value. And finally, let's say your local government's levy limit is $10,000.

Since the government is allowed to collect $10,000 and the value of all real property in the town is $600,000, that works out to a $16.66 mill rate (both of you will pay $16.66 for every $1,000 in property value) and an effective tax rate of 1.66%. With equal property valuations, you and your neighbor's tax bills will be the same––$5,000.

In this scenario, notice that your property value relative to your neighbor's is 1:1. But if next year your assessor decides to change the relative value of your property, your tax bill will go up or down.

Now let's say your properties get reassessed. Neither of you have made any improvements and your properties are still of the same quality. The assessor keeps your neighbor's assessment the same at $300,000, but reassesses your property at $400,000. What will each of your tax bills look like now?

The town is still only entitled to $10,000 in tax revenue but the total value of property in the town has increased to $700,000. Therefore the new mill rate has decreased to $14.28 for every $1,000 in property value and the effective tax rate has decreased to 1.42%. Your neighbor's tax bill will now be only $4,285.71, but yours will have increased to $5,714.28.

In the first scenario, your property accounted for 50% of the town's property value so you paid 50% of the taxes. But after the reassessment, your property accounted for 57.14% of the town's property value, so you paid 57.14% of the taxes. Your taxes increased because your property value relative to your neighbor's increased. And the same result would occur even if your property value decreased to $200,000 and your neighbor's decreased to $114,280. The government is still going to collect its $10,000 regardless of what your property is worth because it doesn't set a tax rate, it collects a mill rate.

One testimony that was given to us came from a gentleman in Sheboygan county.

The gentleman's 2025 assessment was $286,000 but was reassessed at $380,500 in 2026 despite not making any improvements to his property. This was a net increase of $94,500, or 33%. Now, is this cause for concern? It depends. Did the average property in Sheboygan county get reassessed at a 33% higher valuation? Probably not.

So when the assessor comes to town, you don't really need to worry about what your new assessment will be. Whether it's higher or lower doesn't actually change your tax bill. What changes it is whether your share of the town's total property value changes. If last year your property value was 1% of the town's total property value, then you'll pay 1% of the taxes. But if your new assessment makes it so that now your property value is 2% of the town's total property value, then you'll pay 2% of the taxes.

What matters is how your relative property value changes.

What To Do About It

Apart from ensuring you have the ugliest house in the neighborhood, there are a number of reforms that can address this problem of dramatically increasing property taxes due to assessments.

The first is to abolish property taxes. There are some very serious problems with how disproportionately property taxes impact retirees and others on fixed incomes. When a property owner has no means to increase their income from year to year but can have their property taxes double because an assessor liked their flower beds, something is seriously wrong. Property taxes came about because most property used to be the source of an income. Since everyone was a farmer, taxing by the acre worked as a good proxy for an income tax. But even at their origin property taxes were unpopular because they were considered direct taxes––taxes that impacted a person's ability to make a living.

And abolishing property taxes isn't really all that far-fetched. As is being considered in Florida, abolishing property taxes would not apply to school districts, so a similar reform could be proposed here if Wisconsinites are worried about keeping funding for public schools. Still, there's good reason to believe that local governments and schools can get by with a flat, universal sales tax.

Second, limit assessment increases. California actually capped assessment increases to 1% per year back in 1978 when it passed Proposition 13. An exception to this rule was that reassessments could increase by more than the cap if the property had been sold for more than its assessed value. Along these lines, assessments could be tied to the most recent purchase price of the property. And if improvements occur after the fact, property owners could be required to report those expenses if they exceed a certain dollar value for a single structure. That expense could then be used as its assessed value. For large improvements like houses, annexes, barns and garages, this requirement could be imposed during the permitting process.

Third, make reassessments for existing real property less frequent. When it comes to NNC, assessments should probably occur upon completion of the project, but existing properties could be reassessed every other year or every third year rather than every year. This may result in even more dramatic increases in assessments, but so long as levy limits are in place and the relative valuations of properties remain mostly constant, the increase in the assessment won't matter. A natural consequence of this scheme, however, is that new constructions are likely to be over-valued relative to existing real property, and would assume a disproportionate share of the tax burden. However, bi-annual assessments for existing property would mitigate this harm, and especially if combined with other reforms. But given that new constructions are always a tiny fraction of the total property value of a town, a reform like this would overwhelmingly benefit existing property owners, and those with new constructions would be reassessed in two years anyway, meaning the harm is only temporary.