3% or 5% Value Limitation

The 5% value limitation was passed overwhelmingly by voters in 1996 in State Question 676. The measure amended Article 10 of the Oklahoma Constitution by limiting the fair cash value of real property for property tax purposes. The fair cash value will not increase by more than 5% in any taxable year. This limit only applies to real property which is assessed by a county assessor. If the property is transferred, changed, or conveyed, the limitation does not apply for that year. The limitation does not apply if improvements have been made to the property. If improvements have been made to the property, the increased value to the property will be assessed for that year.

The 5% limitation is not an automatic increase every year for every property. The limitation is utilized for those properties where the true market value is more than the limited or capped taxable value. This concept was confirmed by the attorney general in an opinion in September of 2001.

The limitation acts as a "phase-in" tool to hold back substantial increases when there is a strong demand in the real estate market causing rapid increases in property values. When market conditions reflect that property values have increased greater than 5%, the limitation allows only a gradual increase rather than the true increase based on the market value.

Actual property taxes can increase by more than 5%. The 5% limitation relates only to real property value, not property tax. Increases in millage rates, which are used in calculating property taxes, usually are a result of a vote from bond issues that may be county-wide and/or related to a particular city or school district. These voter-approved issues have no bearing on the 5% limitation law.