what is mill rate

A mill rate is a figure used by many municipalities to calculate property taxes. It represents the amount of property tax that a homeowner pays on their real estate and is measured in mills, which is equivalent to a tenth of a percent. For example, a mill rate of 1 means that a homeowner pays $1 in taxes for every $1,000 of their propertys assessed value. Municipalities determine a homeowners tax liability by multiplying their homes assessed value by its mill rate, which is set on an annual basis. The mill rate is also known as the millage rate, and it is derived from the Latin word "millesimum," meaning thousandth. The government entities set mill rates based on the total value of property within their jurisdiction to provide the necessary tax revenue to cover projected expenses such as roads, schools, and emergency services in their annual budgets. When municipalities use a higher mill rate, a homeowners property taxes are consequently higher, which can ultimately impact their monthly mortgage costs.