The mill rate is the amount of tax payable per dollar of the assessed value of a property. It is a critical figure representing the amount per $1,000 of the assessed value of a property, which is used to calculate the amount of property tax.
Key Takeaways
- Mill rate is a tax rate—the amount of tax payable per dollar of the assessed value of a property.
- A mill is derived from the Latin word millesimum, meaning thousandth.
- As used in property tax, 1 mill is equal to $1 in property tax levied per $1,000 of a property’s assessed value.
- Government entities set mill rates based on the total value of property within their jurisdiction to provide the necessary tax revenue to cover various local expenses such as roads, schools, and emergency services.
- Property taxes are calculated by multiplying the assessed, taxable property value by the mill rate and then dividing that sum by 1,000.
Grasp the Inner Workings of the Mill Rate
Mill rate, also known as the millage rate, originates from the Latin word millesimum, meaning thousandth. In property tax terms, 1 mill translates to $1 of property tax levied per $1,000 of a property’s assessed value.
The millage rate for a property can be found on the property deed, or through your municipal tax office.
Origins of the Mill Rate
Your property tax mill rate is determined by various taxing bodies, which might include township/city, county, school boards, or emergency services districts. These rates are invariably combined to calculate your total property tax bill.
For instance, after a local government passes its budget, the calculated deficit is divided by the total property value in the town and then multiplied by 1,000 to obtain the mill rate.
Calculate Your Property Taxes with Confidence
Property taxes are calculated using the following formula:
Property tax levied on property = (mill rate × taxable property value) ÷ 1,000
For example, if the mill rate is 7 and your home’s taxable value is $150,000, then your property tax bill is $1,050. Essentially, for every $1,000 of assessed value, $7 is due in property taxes.
How Property Taxes Fuel Community Development
Property taxes are indispensable for funding the vital operations of municipal and other local governments. All states impose property taxes, with these taxes often being assessed by multiple governing bodies.
Entities define mill rates based on the collective property value within their jurisdiction to ensure sufficient revenue for their annual budgets, supporting infrastructure, emergency services, etc. As real estate values fluctuate, assessors typically update property’s taxable values annually.
Property taxes fall under ad valorem tax, meaning they are value-based. The taxable value is derived from local real estate data and represents a percentage of a property’s market value. Property owners can request a reassessment if they believe their property’s assessed value is too high.
Some states provide a homestead exemption, reducing a certain dollar amount from a property’s market value for tax purposes. For example, a state with a $50,000 homestead provision only subjects $150,000 of a $200,000 home to property taxes.
FAQs: Practical Insights into the Mill Rate and Property Taxes
How Do You Calculate Property Taxes Based on the Mill Rate?
The mill rate represents the portion of property tax attributable to specific real estate. It’s calculated in mills—one-tenth of a percent. To determine your property tax, wholly multiply your property’s mill rate by its assessed value and then divide by 1,000.
How Do You Find Your Mill Rate?
Local and municipal governments establish mill rates based on their financial requirements. Generally, you can find these rates on your local government or assessor’s office website, or by calling them directly.
How Do You Calculate Percentage From Mill Rate?
Mill rates represent one-tenth of a percent. Convert the mill rate to a percentage by multiplying it by ten.
Unlock Your Potential with Property Tax Knowledge
Understanding the mill rate empowers you to comprehend property taxes within your jurisdiction. Fathoming how mill rates are determined and utilized ensures you know exactly what you’re paying for—from infrastructural services to public schools. Armed with this knowledge, you can better navigate property tax puzzles, make informed decisions, or address reassessment issues head-on.
Related Terms: property tax, assessed value, reassessment, fair market value, homestead exemption, ad valorem tax.
References
- Cornell Law School, Legal Information Institute. “Millage”.
- Online Etymology Dictionary. “Mill (n.2)”.
- LibreTexts Mathematics. “Business Math: 7.2: Property Taxes”.
- Tax Foundation. “Where Do People Pay the Most in Property Taxes?”
- Institute on Taxation and Economic Policy. “Property Tax Homestead Exemptions”.
