What is a Millage Rate in Real Estate?

In real estate, the millage rate (also called the mill rate) is the tax rate used to calculate property taxes.

It represents the amount of tax payable per $1,000 of a property’s assessed value. The term “mill” means one-tenth of a cent, or $1 of tax for every $1,000 in assessed value.

🧮 How It Works

Property Tax = (Assessed Value ÷ 1,000) × Millage Rate

For example:

• If a property has an assessed value of $500,000
• And the millage rate is 25 mills
  Then:

🏛️ Who Sets It

Millage rates are determined by local taxing authorities — typically:

• City or county governments
• School districts
• Fire protection or park districts

Each authority sets its own rate, and the total millage rate is the sum of all applicable local rates.

🏠 Why It Matters in Real Estate

• Investors and homeowners use it to estimate annual carrying costs.
• Developers factor it into operating expenses and cap-rate calculations.
• Brokers and appraisers include effective tax rates when comparing properties across markets.

High millage rates can significantly impact cash flow and property value, even when assessed values are moderate.