How are property tax rates determined?
The method normally used to calculate property tax rates differs from approaches used to set other tax rates. To meet the goal of spending only what it has, a local government must set a suitable tax rate. First, it estimates the amount of tax revenue it requires to cover expenditures for the next fiscal year after subtracting all other sources of revenue. Then, the total tax revenue required is divided by the total assessed value of taxable property in the tax area. The resulting figure is multiplied by 1,000 and is called the mill rate. The mill rate, simply put, is the amount of tax payable for each dollar of assessed value expressed to the third decimal place. Translated into an equation, the mill rate calculation is as follows: Total tax revenue required x 1,000 = Mill rate Total taxable assessment Individual property taxes owing are arrived at by multiplying the assessed value of the taxpayer’s real property by the mill rate. Expressed as an equation, the calculation reads as fol
