Certified Pennsylvania Evaluator Practice Exam

What does the term 'millage' signify?

1. 1/100 of a dollar

2. 1/1000 of a dollar

3. 1/10 of a dollar

4. 1/10000 of a dollar

The correct answer is: 1/1000 of a dollar

The term 'millage' specifically refers to a rate used for calculating property taxes, and it is defined as one-tenth of a cent. This means that for every dollar of assessed property value, one mill represents one-thousandth of that dollar. In practical terms, when a municipality sets a millage rate, it uses this fraction to determine how much tax will be levied on property owners. For example, if the millage rate is set at 15 mills, a property assessed at $100,000 would owe $15 in taxes, as this is derived from the millage rate multiplied by the property value in thousands. Understanding that 'millage' equals 1/1000 of a dollar helps clarify how taxation works in terms of property assessments and provides a crucial perspective on local government financing through property taxes. The other options do not accurately reflect the meaning of millage in the context of property tax calculations, emphasizing that assessment and taxing authorities commonly rely on this precise definition when setting tax rates.