{"### Overview
The mill levy is an essential property tax applied to a property based on its assessed value. The rate of this tax is quantified in mills, with one mill equivalent to one dollar for every $1,000 of assessed property value. A comprehensive understanding of the mill levy can reveal how local governments and jurisdictions generate necessary revenue for public services such as schools, parks, and community amenities.
Key Takeaways
- Applicable to Property: The mill levy is a property tax applied on the assessed value of a property.
- Rate Explained in Mills: One mill is equal to one dollar per $1,000 of assessed value.
- Supports Public Services: It raises revenue to cover the budgets for local government and public services including schools and recreational areas.
How Mill Levies Work
Various taxing authorities can exist within a single region, which may encompass school districts, counties, and cities. When applying the mill levy, the rate is expressed in mills, projecting how much you will owe in real estate taxes based on the assessed value of your property. Typically, a percentage formula recognized as the assessment ratio is leveraged by jurisdictions to compute the property’s value for the mill levy.
Important Note
Generally, a tax assessor establishes the assessed property value used for calculating the mill levy. On some occasions, a fraction of the property’s market value is considered for setting the mill levy instead.
Practical Example of a Mill Levy Calculation
Consider a scenario where the total property value in a given area sums up to $1 billion. Suppose the school district requires $100 million, the county demands $10 million, and the city mandates $50 million in revenue.
- School District: $100 million / $1 billion = 0.10
- County: $10 million / $1 billion = 0.01
- City: $50 million / $1 billion = 0.05
Combining these tax rates, the mill levy for the area amounts to 0.16 or 160 mills (as one mill equals 0.001).
In general, mill levies are enacted over real estate property, including land, buildings, and even significant personal assets such as vehicles and boats.":“application/json
Related Terms: assessed value, tax jurisdiction, tax assessor.
References
- Tax Foundation. “How to Calculate Property Tax Liability”.
