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Julia Kagan is a financial/consumer journalist and former senior editor, personal finance, of Investopedia.
Updated June 11, 2024 Reviewed by Reviewed by Lea D. UraduLea Uradu, J.D. is a Maryland State Registered Tax Preparer, State Certified Notary Public, Certified VITA Tax Preparer, IRS Annual Filing Season Program Participant, and Tax Writer.
Fact checked by Fact checked by Vikki VelasquezVikki Velasquez is a researcher and writer who has managed, coordinated, and directed various community and nonprofit organizations. She has conducted in-depth research on social and economic issues and has also revised and edited educational materials for the Greater Richmond area.
Part of the Series Property Taxes Guide
The mill rate is the amount of tax payable per dollar of the assessed value of a property. It is a figure that represents the amount per $1,000 of the assessed value of the property, which is used to calculate the amount of property tax.
Mill rate is also known as the millage rate. The term "millage" is derived from a Latin word millesimum, meaning thousandth, with 1 mill being equal to 1/1000th of a currency unit. As used in relation to property tax, 1 mill is equal to $1 in property tax, which is levied per $1,000 of a property's determined taxable value.
You can find the millage rate for an individual property on the property deed itself or by calling your municipal tax office.
The mill rate for your property is determined by who or what is taxing you. That means that different mill rates are charged by different agencies, which can include the township or city, county, school boards, and emergency services districts. All these individual rates are combined to calculate your final property tax bill.
For example, once a budget is passed by your local government, known revenues are subtracted, which leaves the deficit to be raised through property taxes. This amount is divided by the value of all property in the town, which is then multiplied by 1,000. This figure represents the tax rate or the mill rate.
Property taxes are calculated by multiplying the assessed, taxable property value by the mill rate and then dividing that sum by 1,000.
The property tax levied on a property can be calculated as follows:
(Mill Rate x Taxable Property Value) / 1,000 = Property Tax
For example, if the local mill rate is 7, this means that for every $1,000 of assessed value, $7 is owed in property taxes. If a taxpayer's personal residence has a taxable value of $150,000, then the property tax bill for their residence is:
(7 x 150,000) / 1,000 = $1,050
Property taxes are critical to funding the operations of municipal and other local government entities. Not all states levy income taxes, but all states do levy property taxes. Property taxes are often assessed by more than one government entity. For example, a single property may be assessed for both municipal and county taxes.
Government entities set mill rates based on the total value of property within the entity's jurisdiction, to provide the necessary tax revenue to cover projected expenses in their annual budgets. This includes things such as infrastructure, police and emergency services, parks, and public schools. For this reason, and also because of fluctuating real estate values, a tax assessor typically updates the taxable value of the property annually.
Mill rates will usually vary for different types of property, such as residential, commercial, or industrial properties.
Property tax is an ad valorem tax, which means it is based on value. The assessed tax value of the property is calculated using local real estate data and is usually a percentage of a property's fair market value, determined by multiplying the property's market value or appraisal value by an assessment ratio established by the local taxing authority.
Some states have a homestead provision that exempts a specified dollar amount of a property's market value from assessment for property taxes. For example, in a state with a $50,000 homestead provision, only $150,000 of a $200,000 home would be subject to property taxes.
The assessed tax value may be either higher or lower than a property's actual market value. If you believe that your property has been assessed at an unreasonably high value, you can request a reassessment.
The mill rate represents the amount of property tax that you pay on real estate. It is measured in mills, equivalent to a 10th of a percent. For example, a mill rate of 12 means that your property tax is equal to 1.2% of your property's assessed value. To calculate your property tax, multiply your property's mill rate by the assessed property value and divide it by 1,000.
Mill rates, or millage rates, are calculated by local and municipal governments based on their financial needs. You can usually find the millage rates for your area by calling or checking the website for your local government or assessor's office.
Property taxes are often measured in mills, representing a 10th of a percent. To determine the tax rate as a percentage, multiply the mill rate by 10.
The mill rate is simply a tax rate that is used to assess the property tax within a jurisdiction. It utilizes a specific calculation: 1 mill is equal to $1 in property tax levied per $1,000 of a property's assessed value. So a mill rate of 7 means that you pay $7 for every $1,000 of your property's assessed value. The assessed property taxes are then used to pay for government expenses within the area where the property is situated.
Article SourcesAn ad valorem tax is a tax derived from an assessed value, such as the value real estate or personal property, with a tax rate applied.
Many state and local governments tax tangible personal property such as cars and boats in addition to real property such as homes and land. Rates vary by locality.
The phrase taxation without representation describes a situation when a population is required by law to pay taxes without receiving government representation in return.
A tax lien certificate is a claim against property that has had a lien placed upon it as a result of unpaid property taxes. Certificates are typically sold at auction.
A qualified higher education expense is a tax credit for the parents of students attending a college or other post-secondary institution.
A filing extension is an exemption made for taxpayers who are unable to file their federal tax return by the regular due date.
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