To determine the amount of property tax that each taxpayer will be responsible for, the total amount of revenue needed by the taxing authority and the total assessed value in the taxing authority’s jurisdiction must be known. The tax rate for the taxing authority is calculated by dividing the amount of needed revenue by the total assessed value.
Example 1: $12,000,000 needed revenue / $600,000,000 assessed value = 0.02 tax rate
This result can be expressed as a 2% tax rate applied to the assessed value of property. In the next year, if the taxing authority’s budget increases and the total assessed value remains the same, then the tax rate could increase and so would taxpayers property tax bills. On the other hand, if the budget remains the same but the total assessed value increases, then the tax rate could decrease.
In Louisiana, the tax rate is not stated as a percentage but rather as a millage, which is expressed in mills (thousandths of a dollar) per dollar.
Example 2: 1 dime = $0.10, or 1/10 of $1
1 cent = $0.01, or 1/100 of $1
1 mill = $0.001, or 1/1,000 of $1
From Example 1 above, the 0.02 tax rate would be expressed as 20 mills by moving the decimal three places to the right.
An example of how the millage system works is as follows: If the millage rate is 20 mills, then a taxpayer would pay $20.00 in tax for every $1,000 in assessed value. (0.02 x $1,000) Therefore, if an asset is assessed at $10,000, the tax amount due would be 10 times $20.00 or $200.00.