An ad valorem tax is a tax that is calculated as a percentage of the value of something—such as tangible (physical) personal property (goods in a warehouse, office furniture, computer and telephone systems, inventory, etc.).
For example, county tax assessors often place a value on a business's tangible personal property and assess an ad valorem tax on the property.
In Michigan, ad valorem taxes are property taxes based on the assessed value of real estate or personal property. The local county tax assessors are responsible for assessing the value of tangible personal property owned by businesses, such as office equipment, inventory, and other physical assets. The assessed value is typically a percentage of the property's fair market value. The tax rate, which is applied to the assessed value, varies by locality and is determined by the local taxing authorities. These taxes are used to fund local services such as schools, roads, and public safety. It's important for businesses to accurately report their tangible personal property to the assessor's office to ensure correct ad valorem tax calculation. In some cases, there may be exemptions or incentives available that can reduce the tax burden on businesses.