Understanding Mill Rates and Property Taxes

A mill rate is a key component in determining your property taxes. It represents $1.00 of tax for every $1,000 of a property's assessed value. To calculate property tax, multiply the assessment of your property by the mill rate and then divide by 1,000.

For example, if your property is assessed at $50,000 and your municipality has a mill rate of 20, your annual property tax will be $1,000 (calculated as $50,000 x 20 ÷ 1,000 = $1,000).

Mill rates are set by local governments, typically through a process involving a Board of Finance or a Town Council. These entities first determine the total budget needed to fund municipal salaries, education, local services, equipment, and other expenses. Once other revenue sources, like federal or state grants, are accounted for, the remaining amount must be raised through property taxes.

This remaining amount is used to calculate the mill rate. The proposed budget and mill rate then go to a Town Meeting, where local taxpayers can review, discuss, and vote on the proposal. If the budget is approved, the mill rate is finalized and applied to property assessments.

• Mill rates directly affect how much you pay in property taxes each year.
• Higher mill rates result in higher taxes, while lower rates reduce the burden on property owners.
• Mill rates can change annually based on your town's budget needs, so it's important to stay informed.

Understanding mill rates is crucial for property owners looking to manage their tax obligations. By being aware of how they are calculated and the factors that influence them, you can better anticipate changes in your tax bill.