You recently received your property tax bill, and as you look over the tax assessments, you notice a term you’re not familiar with: mill rate.
Mill rate has an impact on a homeowner’s property tax bill
Aspen Daily News reported that the way tax districts frequently utilize to indicate a locality’s property tax rate is the mill rate, also known as mill levy or millage. As one of the factors in the formula used to determine a property tax bill, the mill rate has an impact on a homeowner’s property tax bill.
We asked Mesa County, Colorado’s property tax assessor Ken Brownlee to demystify mill rates and explain how this crucial factor affects calculating property tax payments. Brownlee assures us that it really is fairly straightforward. But it’s important to realize that the equation contains some moving pieces.
Describe the mill rate. The word “mill” comes from the Latin word mille, which means “thousand.” One mill rate, when used in relation to property taxes, is equivalent to a $1 tax levy for every $1,000 of an assessed value for a home. For instance, a residence assessed at $300,000 with a mill rate of 3 would be subject to a tax of $3 per $1000 of assessed value. The homeowner would owe $900 in taxes, or $3 times 300.
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Mill rates are typically the result of adding together several tax rates
The mill rate is established by who? The mill rate for a house is determined by the taxing authority on behalf of the local and state government in the area where the property is located.
How is the mill rate calculated? Property taxes are used to fund public services including roads, libraries, fire departments, and schools. Property owners within particular taxation districts share the cost of operating these public services through tax levies.
In an article from Homelight, a tax district first assesses how much income is required to operate before setting a mill rate. The tax district then determines how much of its budget will be funded by property taxes and divides the necessary amount by the entire taxable value of the real estate under its jurisdiction.
Depending on where your home is located, mill rates are typically the result of adding together several tax rates.
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