A mill levy is a property tax that is based on the assessed value of a property. The rate of this tax is expressed in mills. One mill is equal to $1 for every $1,000 of assessed value. The mill levy rate is determined every year by dividing the total assessed value of all of the taxable property in a city or town by the overall amount of tax that is necessary to cover city, county and state budget requirements.
Determining Mill Levy
The total mill levy is determined by adding the number of mills that each taxation authority charges per $1,000 of official assessed, or taxable, value. In some cases there is an exemption from mill levy for a portion of the assessed value, such as the first $10,000 or $20,000. Each taxing authority determines its own mill levy and the amounts of each levy are usually added and billed together.
Mill Levy Payment
The mill levy is paid to one tax department, usually that of the county or city in which the property is located, and that department then distributes the funds among the authorities to which they are due. The mill levy is billed as a single amount to each taxpayer, although detailed bills may include the number of mills of tax that are earmarked for each entity included in the mill levy.
Calculating Mill Levy
The official assessed value of a property is usually set every year by municipal or county tax assessors, and either this or a percentage of the market value of the property is used to set the mill levy. If there is any exemption, it is subtracted from the assessed or market value, which is then multiplied by any applicable percentage before it is multiplied by the full amount of the mill levy as expressed in dollars. Most jurisdictions use a percentage formula, which is known as an assessment ratio, in determining the property value for the mill levy.
A property that is assessed at $100,000, with an exemption of $20,000 would have an effective assessment of $80,000. If the mill levy is 10 mills, the amount due on that property is computed as follows: ($80,000 x 0.010) = $800.00.
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