What Is the Mill Rate for Property Taxes?
Unravel the core concept behind property taxation. Discover how a specific rate directly influences your real estate costs and financial planning.
A mill rate, also known as a millage rate, is used to calculate property taxes. This rate represents the amount of tax payable per dollar of a property’s assessed value. It funds local government budgets, supporting public services. These services typically include schools, police and fire departments, infrastructure projects, and various community facilities.
Understanding the Mill Rate
A “mill” is a unit of taxation representing one dollar of tax for every $1,000 of a property’s assessed value. The term “mill” comes from the Latin “millesimum,” meaning thousandth. A mill rate of 1 means $1 in property tax is levied for every $1,000 of assessed value.
Property taxes are not based on a property’s market value, but rather on its assessed value. This assessed value is the taxable value assigned by a local government. While the assessed value can sometimes be the same as the market value, it is often a percentage of the market value and may be lower. The mill rate is expressed as a whole number (e.g., 20 mills) or as a decimal (e.g., 0.020).
How Mill Rates Are Used in Property Taxation
The mill rate is directly applied to a property’s assessed value to determine the annual property tax obligation. To calculate the property tax, the assessed value of the property is multiplied by the mill rate, and that product is then divided by 1,000.
For example, consider a property with an assessed value of $250,000 located in an area with a mill rate of 15 mills. To find the property tax, you would multiply $250,000 by 15, which equals $3,750,000. Dividing this sum by 1,000 results in an annual property tax bill of $3,750. Various taxing authorities, such as county governments, city municipalities, and local school districts, can each set their own mill rates. The total property tax bill is often a sum of these individual applications to meet their financial needs.
Identifying Your Local Mill Rates
Property owners can find information about the specific mill rates applicable to their property or area through several official sources. Local government websites are a key resource, often providing detailed tax information. County assessor’s offices or municipal finance departments also provide current millage rates.
Property tax bills themselves typically itemize the applicable mill rates for different taxing authorities. Mill rates can change annually, as they are often adjusted based on the financial needs of local governments and school boards. Checking official sources periodically ensures access to current information. Some jurisdictions may also have varying rates depending on the property type, such as residential or commercial, or specific zoning designations.