Millage Rate

What Is a Millage Rate?

A millage rate is the figure used to calculate property tax in many parts of the United States. The word comes from the Latin "mille," meaning thousand. One mill is one-tenth of a cent, or one dollar of tax for each $1,000 of a property's taxable value. A millage rate of 20 mills therefore means $20 of tax for every $1,000 of assessed value, which is the same as a 2% rate.

How It Works

Local governments such as school districts, counties, cities, and special districts each set their own millage rates. Each taxing authority decides how much revenue it needs for the year, divides that amount by the total taxable value within its boundaries, and expresses the result in mills. A property owner's total tax bill is the sum of the millage rates from every authority that covers the property, applied to the property's taxable value.

How It Is Calculated

The basic formula is:

Property Tax = (Taxable Value / 1,000) × Millage Rate

For example, if a home has a taxable value of $150,000 and the combined millage rate is 25 mills, the annual tax would be (150,000 / 1,000) × 25, or $3,750. Taxable value is often lower than market value because of exemptions or assessment rules, so the assessed figure matters as much as the rate itself.

Why It Matters to Investors

Millage rates affect the carrying costs of real estate, including rental properties, and they can change from year to year as budgets and property values shift. Investors who own or analyze property-heavy businesses, municipal bonds backed by property taxes, or real estate investment trusts may find that local tax rates influence expenses and returns. Reading how a rate is set and how often it is revised gives a clearer picture of long-term property costs.