We were asked to try to explain “inside millage”, so we thought we would share what we know about this confusing topic.
I found several website that address “inside millage” versus “outside millage”, but they all got very complicated.
Let me try to simplify it as much as I can.
The whole concept of using millage was started when the State was formed. It is an old archaic system that should be replaced by simply using percentages of home valuation. However, until the politicians decide to make it easy on the taxpayers, we are stuck with the millage concept.
Definition of a mill: Here is the State definition – A mill is 1/1000 or .001. One mill cost a property owner $1.00 for every $1,000 of taxable value.
I prefer to use this formula: 1 mill equals $35.00 for every $100,000 of home valuation.
For example: a couple of ways to calculate the 1 mill tax on a home valued at $300,000:
Home Valuation = $300,000 x 35% of value = $105,000 taxable value /$1,000 = $105.00 tax per year
Home Valuation = $300,000 / $100,000 = 3 x $35.00 per $100,000 = $105.00 tax per year
In Ohio, millage is referred to as “inside” millage and “outside” millage.
Inside millage is millage provided by the Constitution of the State of Ohio and is levied without a vote of the people. The maximum inside millage per taxing district is 10 mills (a taxing district is usually divided by the respective public school that the taxpayers support), which represents a 1% property tax. [10 mills / 1,000 = 1.0%] There are various political sub-divisions that reap the reward of the inside millage – schools, parks, county government, etc. The inside millage is usually controlled by the commissioners in the county. The political sub-division can request a piece of the inside millage, but, in reality, it must be approved by the commissioners.
The inside millage tax will increase with each State mandated reappraisal every 3 and 6 years. The actual millage stays constant, but the taxable base increases with the property reappraisals. So as we see this year, the taxpayers will see an increase in their property taxes without a vote of the people. The inside millage is not subject to the tax reduction factors of House Bill 920, which was meant to eliminate tax increases due to inflation. The 3 year reappraisals are based on comparable sales, while the 6 year reappraisal requires a visit to each and every home in the county.
The “outside millage” levies require a vote of the taxpayers.
I hope this helps you understand “inside millage” a bit better.
Categories: Real Estate Taxes