How Does the Millage Rate Affect Your Property Taxes?
- The vast majority of cities, counties and towns in the U.S. have the authority to levy their own property taxes. Local officials are free to set a millage rate that will produce whatever amount of revenue they believe is necessary to run the government. If the officials decide to cut spending, they may cut the millage rate. But other factors, like a reduction in state aid or a general decline in property values, can influence them to raise the rate.
- To determine how much tax you must pay, a local official called an assessor compares your property to others that are similar in location, size and other characteristics. When the millage rate is applied to his assessment, or estimation, of your property's value, it produces an amount considered your fair share of the community's overall tax burden. For example, the owner of a $100,000 home would owe $2,000 per year in property tax if the rate is 2 percent.
- Generally, an assessor must follow rules of estimation set either locally or by the state. However, he may make mistakes. For example, the assessor may measure your deck incorrectly, or fail to notice structural deterioration. If you believe your assessment is too high, you can challenge it based on evidence of inaccuracy or errors in judgment. The millage rate may also be challenged by any citizen who wants local government to do more with less.
- Unpredictable swings in the real estate market can throw assessments in whole neighborhoods or regions out of whack. For example, the prices of all homes in your part of town may have declined because a great deal of attractive new development has taken place elsewhere. In a situation like this, you can request a community-wide reassessment, also known as a revaluation. Some states limit how often a reassessment can be done, but others leave the judgment to local officials.
