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What are Mill Rates?

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  • Written By: Mary McMahon
  • Edited By: O. Wallace
  • Last Modified Date: 08 November 2016
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Mill rates are property taxes which are levied on the basis of the value of the property. Many municipalities express their property tax rates in terms of mill rates. Property deeds usually indicate which taxes will be levied on the property, and people can also get information about which taxes will apply to their property from local government agencies which handle property tax matters.

The mill rate reflects a tax per thousand currency units. In the United States, for example, a mill rate of 23.4 would mean that for every thousand United States Dollars (USD), a tax of $23.40 USD would be due. The total taxes due are calculated by multiplying the property's assessed value by the mill rate, and divide by one thousand. If, for example, a property was worth $670,000 USD according to the assessor in an area with a mill rate of 23.4, the owner would owe $15,678 USD in property taxes annually.

In some regions, people pay property taxes once a year, while in others they may be due on a quarterly or semiannual basis. It is not uncommon for the mill rate to vary considerably. In addition to a base rate set by a regional government, additional taxes may be levied by schools, fire districts, and so forth to pay for their services. Each of these taxes would be added to the base tax to create a mill rate.

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Someone living in a rural area might have a relatively low mill rate, while someone in an urban area might have a higher mill rate as the result of taxes assessed by government services in the area. While the higher property taxes may be a burden, the increased quality of government services is viewed as a bonus, especially when people have need of these services. Conversely, rural areas can have difficulty funding needed services as a result of low tax rates, comparatively few tax payers, or low property values.

Mill rates are also sometimes known as millage rates or permille rates. All of these words reference the root “mill,” which means “one thousand.” In order for mill rates to rise, voters generally need to approve a proposal which spells out the amount of the rise and the purpose. Voters are often reluctant to vote for tax increases because they do not want to pay higher taxes, although many are perfectly happy to freeze mill rates, even though inflation can mean that local government agencies which rely on taxes for support have less and less money to work with.

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