Legal Definitions - mill rate

The mill rate (sometimes called millage rate) is a unit used by local governments, such as counties or municipalities, to calculate the amount of property tax owed on real estate. It expresses the amount of tax per $1,000 of a property's assessed value. Specifically, one "mill" represents one dollar of tax for every $1,000 of the property's official valuation.

Here are some examples to illustrate the mill rate:

• Example 1: Residential Property Tax Calculation

  Imagine a homeowner owns a house with an assessed value of $350,000 in a town where the local government has set the mill rate at 15 mills. To calculate the property tax, we take the assessed value, divide it by $1,000, and then multiply by the mill rate. So, $350,000 / $1,000 = 350. Then, 350 * 15 mills = $5,250. This means the homeowner would owe $5,250 in property taxes for that year. This example demonstrates how the mill rate directly translates a property's value into a specific tax amount.

• Example 2: Commercial Property in a High-Tax District

  Consider a commercial building assessed at $1,500,000 in a bustling city center. Due to the extensive public services provided, the city has a higher mill rate of 28 mills. Using the same calculation, $1,500,000 / $1,000 = 1,500. Then, 1,500 * 28 mills = $42,000. The business owner would pay $42,000 in property taxes. This illustrates how a higher mill rate, often found in areas with greater demand for public services, results in significantly higher taxes for more valuable properties.

• Example 3: Impact of a Mill Rate Change

  A rural county, seeking to fund a new school, proposes to increase its mill rate from 8 mills to 10 mills. For a farm property with an assessed value of $600,000, the current tax bill at 8 mills would be ($600,000 / $1,000) * 8 = $4,800. If the mill rate increases to 10 mills, the new tax bill would be ($600,000 / $1,000) * 10 = $6,000. This example clearly shows how changes in the mill rate directly impact the amount of property tax owed, allowing residents to understand the financial implications of proposed tax adjustments.