A municipality may use mill rate factors to transfer some of the cost of public services from one property classification to another. All property in a municipality is classified as agricultural, residential or commercial. Mill rate factors essentially adjust the mill rate, with the result that the effective mill rate for a specific property classification may be higher or lower than other property classifications.
To calculate the municipal portion of your property taxes when council implements a mill rate factor, the ad valorem tax calculation is multiplied by the mill rate factor. If the mill rate factor is greater than 1.0, the resulting property taxes will be higher; if the mill rate factor is less than 1.0, the resulting property taxes will be lower. For example, using the above specifics, let's assume that the municipality has implemented mill rate factors of 1.1 for commercial property, and 0.8 for residential property.
- Your commercial property taxes would be ($81,700 x 14.0 / 1000) x 1.1 = $1,258.
- Your residential property taxes would be ($81,700 x 14.0 / 1000) x 0.8 = $915.
By deciding to use these mill rate factors, the council has decided that commercial properties in the municipality will pay a greater share of the cost of public services, relative to residential properties.