At Is Ad Valorem?

An ad valorem tax is a tax based on the assessed value of an item, such as real estate or personal property. ... The Latin phrase ad valorem means "according to value." So all ad valorem taxes are based on the assessed value of the item being taxed.

What does ad valorem mean?

A Latin term meaning "according to [the] value [of something]". The term is used in taxation to designate taxes levied against property, real or personal, at a certain rate based upon the property's value. An ad valorem tax is levied according to the value of the property as determined by an assessment or appraisal.

What is ad valorem tax in simple terms?

Ad valorem tax, any tax imposed on the basis of the monetary value of the taxed item. Literally the term means “according to value.” Traditionally, most customs and excises had “specific” rates; the tax base was defined in terms of physical units such as gallons, pounds, or individual items.