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What is a ‘millage rate’?

This article was originally published in The Notebook. In August 2020, The Notebook became Chalkbeat Philadelphia.

Millage is a relatively obscure term that represents the tax rate levied on real estate or other property. The millage rate is the number of dollars of tax assessed for each $1,000 of property. A rate of 10 mills means that $10 in tax is levied on every $1,000 in assessed value.

A school district typically will set the millage rate each spring as it calculates what it needs to fund its final budget. Some years, the rate stays the same; other years, there’s an increase.

But millage is only one of the variables in determining a district’s property tax revenues. Every property has an assessed valuation, which is set by the county and may not change over a period of years. The assessed value typically is less than what the house might sell for in the current year. It can even be far less if the value of real estate in the area has spiked and assessments aren’t updated. In communities where housing prices are stagnant or even falling, the assessed value and sale price may be about the same.

Here are some sample calculations.

A house in Delaware County has an assessed value of $160,000, and the local school board has adopted a budget including a real estate tax of 20 mills. The homeowner’s tax bill would be $3,200 for the year – 20 mills for each $1,000 of value, or 20 multiplied by $160.

Another district in the county where the real estate is only half as valuable would have to have the millage rate twice as high to generate the same revenue. If the tax rate there was set at 40 mills, a house assessed at $80,000 would generate tax revenue of $3,200 for the year.

Other government entities – the county, the local municipality and a few others – also raise revenues by taxing real estate. In Philadelphia, a portion of the millage from real estate taxes is earmarked for the School District, and a slightly smaller portion goes to the city.

How much one mill raises in a district is determined by the district’s total wealth in assessed property value. The size of the district and the relative value of the property both come into play.

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