How to Calculate Tax Mill Rate

School districts often impose property taxes to fund education.

School districts often impose property taxes to fund education.

Each year you receive your property tax bill and probably wonder how they came up with the amount due. Property taxes are figured using a mill rate, which measures how many tenths of a penny you have to pay per $1. The locality calculates the mill rate based on the amount of money it needs to raise with the property tax and the value of the property in the area. For example, if property values rise and the area still needs to raise the same amount of money, the mill rate will go down because there's more taxable property value. However, if property values fall, or the government needs to raise additional money, the mill rate increases. If you want to calculate the mill rate, you need to know the property values in your area, the assessment rates and how much money the government needs to raise. You might have to do a great deal of research to get this information, including contacting local government, tax assessment and real estate officials.

Calculate the assessed value of each property in the locality by multiplying the fair market value by the assessment rate. Not all properties are assessed at the same rate. The assessment rate measures how much of the property's fair market value is used when figuring the property tax. For example, farmland might be assessed at 30 percent, industrial property assessed at 50 percent and business property assessed at 35 percent. If a house is assessed at 20 percent and has a fair market value of $200,000, the assessed value is $40,000.

Add the assessed value of each property in the locality to find the total assessed value.

Divide the property taxes to be raised by the total assessed value of the property. For example, if the locality wants to raise $1 million and the total assessed value is $80 million, divide $1 million by $80 million to get 0.0125.

Multiply the result by 1,000 to calculate the mill rate. In this example, multiply 0.0125 by 1,000 to find the mill rate for the locality equals 12.5.


About the Author

Mark Kennan is a writer based in the Kansas City area, specializing in personal finance and business topics. He has been writing since 2009 and has been published by "Quicken," "TurboTax," and "The Motley Fool."

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