top of page

Mill Rate

How The Mill Rate Is Set, And How It Affects Your Wallet

What is a Mil Rate?
A mil rate (short for "mill rate") is a term used in property taxation. It's the amount of tax you pay per $1,000 of a property's assessed value.
For example, if the mil rate is 20 mils, you would pay $20 in taxes for every $1,000 of your property's value. If your property is valued at $100,000, your property tax would be calculated like this:
  • Mil rate: 31.74 mils
  • Property value: $100,000
  • Tax: 31.74 x (100,000 ÷ 1,000) = $2,000

Example:
  • Assessed Property Value: $250,000
  • Mil Rate: 31.74 mills (which is 0.03174 when converted to decimal)

Property Tax=(31.74/1000​)×250,000
Property Tax=0.03174×250,000=7,935

So, with a mil rate of 31.74 mills, the property tax would be $7,935 for a property valued at $250,000.

Why Does the Mil Rate Vary?
Mil rates can vary significantly depending on where you live. Local governments need money to fund services, and each locality has different needs and budgets, so they set their own rates. Some of the factors that can influence the mil rate include:
  • Local Budget Needs: A city with higher costs for public services or infrastructure development might set a higher mil rate.
  • State or National Funding: If a state or national government provides more funding for certain services, a locality might set a lower mil rate.
  • Property Values: If property values in an area are rising, the local government might reduce the mil rate to avoid raising taxes too much. Conversely, if property values decline, the government might raise the mil rate to make up for the lost revenue.

Mil Rate vs. Tax Rate
While it’s easy to mix up mil rate with tax rate, they’re actually different concepts:
  • Tax Rate is usually expressed as a percentage. For example, a property tax rate might be 2%. If your property is worth $100,000, the tax would be 2% of $100,000, which is $2,000.
  • Mil Rate is typically expressed in mills (1/1,000 of a dollar). A mil rate of 20 mills means you pay $20 for every $1,000 of assessed value.

Why It’s Important
Understanding the mil rate is crucial because it directly affects your property taxes, which is a significant expense for homeowners. If you're looking to buy a property, the mil rate can give you an idea of how much you'll need to pay annually in taxes. In some places, it might even be a deciding factor for people when choosing where to live, especially if they’re on a fixed income or trying to manage costs.
Additionally, municipalities often use the mil rate to adjust for changes in the economy or shifts in local funding needs. So, even if your property’s value stays the same, the mil rate could still change year-to-year.

Mil Rate and Local Services
Local services are often funded by property taxes, so the mil rate also plays a role in determining how much money goes to things like:
  • Public Schools: A big chunk of property taxes often goes to funding local schools. (In Coventry, this accounts for over 60% of the budget)
  • Fire and Police Services: Taxes help cover the costs of local fire departments, police, and emergency medical services.
  • Road Maintenance: In many areas, property taxes are used for infrastructure projects like road repairs and snow removal.
  • Parks and Recreation: Some local governments use property taxes to fund parks, libraries, and community centers.
The mil rate essentially reflects how much of your property’s value is being used to fund these services.

In short:
The mil rate is a tool that helps local governments calculate property taxes. It varies by region and depends on how much funding local governments need to provide services. It can be a critical factor for homeowners when calculating their tax burden and can influence decisions about property purchases.
If you’re in an area with a relatively high mil rate, your property tax burden could be a significant part of your annual expenses. Conversely, if the mil rate is low, property taxes might be more manageable, even if the property values are high.
bottom of page