Millage Rate: A tax rate that is applied to the assessed value of real estate. Millage rates are expressed not as regular percentages, but in tenths of a penny. For example, a millage rate of 2 mills would mean 2 tenths of a penny.
Let's look at an example: A tax district levies property tax at 5 mills and a homeowner's property has been assessed at $250,000. The homeowner's property tax would be equal to:
5 mills = 5 x 1/1000 = .005
(a tenth of a penny is also equal to 1/1000 of a dollar. Here we convert 5 mills into its percentage of one dollar)
.005 x $250,000 =
(tax rate x assessed value)
$1,250 in tax
Source: The American Heritage® Dictionary of Business Terms