What does the mill rate formula calculate?

The mill rate formula is used to determine the amount of property taxes owed based on the assessed value of a property and the mill levy. The mill rate itself is defined as the amount of tax payable per $1,000 of a property's assessed value. Therefore, the formula for calculating property taxes involves taking the assessed value of the property and multiplying it by the mill rate, which is typically expressed as a fraction (e.g., 0.02 for 2 mills).

This means that the calculation allows property owners to understand their tax obligations based on the value of their property as assessed by the local taxing authority and the prevailing tax rate. By using the correct mill rate, property owners can accurately compute the taxes they owe annually.

The other options present different calculations that do not directly identify how property taxes are computed via the mill rate formula. Thus, they do not accurately reflect the fundamental purpose of the mill rate.