When you research property tax you’ll meet two different “rates,” and confusing them leads to bad comparisons. Here’s the distinction in plain terms.
In one line. The mill rate is what the government charges on taxable value; the effective rate is what you actually pay as a share of market value. This site uses effective rates so places are comparable. US average ≈ 1.08% (Census ACS, 2023 5-year).
Mill rate (millage)
A mill is one-thousandth of a dollar — $1 of tax per $1,000 of taxable value. Local taxing bodies (county, city, school district, special districts) each set a millage, and they’re summed into a combined rate. A 20-mill combined rate is 2.0% of taxable value.
The catch: “taxable value” is the assessed value after exemptions, which is frequently not the market value of your home.
Effective rate
The effective rate sidesteps all of that. It’s simply:
effective rate = annual property tax ÷ market value × 100
It answers the question people actually care about: for a home worth $X, what do I pay?
Why they differ — a worked example
| Home A (full-value assessment) | Home B (50% assessment ratio) | |
|---|---|---|
| Market value | $300,000 | $300,000 |
| Assessed/taxable value | $300,000 | $150,000 |
| Mill rate | 15 mills (1.5%) | 30 mills (3.0%) |
| Tax bill | $4,500 | $4,500 |
| Effective rate | 1.5% | 1.5% |
Both homes pay the same and have the same effective rate — but their mill rates look twice as different. That’s why a raw mill-rate comparison between states is misleading, and why every page on this site uses the effective rate.
What lowers your effective rate below the mill rate
- Assessment ratios below 100% of market value.
- Assessment caps that hold assessed value below market for long-time owners.
- Exemptions (homestead, senior, veteran) that cut the taxable base. See exemptions.
Put it to use
Look up your county’s effective rate or your state’s, then compute your own (bill ÷ market value). If yours is much higher than the county median, read how to appeal. To model a purchase, use the property-tax estimator.