Which factor is essential when determining the effective tax rate?

The effective tax rate is calculated based on the relationship between the amount of tax paid and the assessed value of a property. Therefore, the assessed property value is crucial because it serves as the benchmark for calculating the tax that is owed. The effective tax rate is typically expressed as a percentage and is derived by dividing the total tax liability by the assessed value of the property.

While annual income, property location, and market demand can affect property taxes indirectly by influencing both property values and the tax burden, they are not primary factors in the direct calculation of the effective tax rate itself. The assessed property value provides the necessary framework to quantify the tax liability based on local tax rates, making it an essential factor in determining the effective tax rate.