What is 'Millage Rate'
The millage rate is the amount per $1,000 used to calculate taxes on property. Millage rates are most often found in personal property taxes, where the expressed millage rate is multiplied by the total taxable value of the property to arrive at the property taxes due. Millage rates are also used by school boards to calculate local school taxes to be collected based on a derivation of the total property value within school district boundaries.
BREAKING DOWN 'Millage Rate'The term is derived from the root word mill, which means "thousand." Millage rates are often expressed mathematically with the symbol %o, as in 1%o, which is one part per thousand, or 0.1%. Millage rates for individual properties are usually found on the property deed itself. Frequently, these taxes are labeled in "mills," with one mill representing $1 in tax per $1,000 in tax-assessed value.
How to Apply Millage Rates
By knowing a home's tax-assessed value and the total millage rate for the home, a homeowner can calculate the annual property taxes due on that home. A home's tax-assessed value is expressed as a percentage of its market value. In some places, homes are taxed on 100% of their market value. In other places, tax-assessed value can equal as little as 10% or less of market value. The millage rate is applied to the home's tax-assessed value.
For example, consider a home with a market value of $200,000 in an area where the tax-assessed value equals 20% of market value. The owner of this home is taxed on a value of $40,000. Assume the home's total millage rate is 70 mills. This means the homeowner owes $70 in taxes for every $1,000 in tax-assessed value. This amounts to $2,800 in property taxes ($70 * $40).
Where Millage Rates Come From
Usually, in areas where property taxes are calculated in mills, several discrete taxing authorities have their own millage rates that are then combined to arrive at a homeowner's total property tax liability. These entities include counties, municipalities, emergency services districts, community colleges and school boards.
Returning to the above example where the homeowner's total millage rate is 70 mills, this rate is likely a combination of several millage rates imposed by different taxing authorities. For example, the county charges 20 mills, the municipality charges 15 mills, the emergency services district charges 10 mills, the local community college charges 10 mills and the school board charges 15 mills, for a total of 70 mills.