Michigan Property Tax Exemption

Michigan offers several programs that reduce or eliminate property taxes for qualifying residents.

These programs are based on factors such as primary residence status, income level, age, disability, veteran status, and property use.

Some provide an upfront exemption that lowers or removes property taxes, while others offer a refundable tax credit after taxes are paid.

Understanding which programs apply to you can result in substantial annual savings.

Key Michigan Property Tax Exemptions

1. Principal Residence Exemption (PRE)

The Principal Residence Exemption (PRE) is the most common and widely used property tax exemption in Michigan.

What It Does

• Exempts your primary home from the 18 mills of local school operating taxes
• Does not eliminate all property taxes, but significantly reduces them

Who Qualifies

• You must own and occupy the home as your principal (primary) residence
• The property cannot be used primarily as a rental or vacation home

Important Deadlines

• June 1 for the summer tax levy
• November 1 for the winter tax levy

How to Apply

• File a Principal Residence Exemption Affidavit (Form 2368) with your local city or township assessor
• The exemption remains in place until the property’s use changes, but changes must be reported promptly

2. Poverty Exemption

Michigan allows homeowners with very low income and limited assets to request a full or partial exemption from property taxes under the Poverty Exemption.

Who Qualifies

• Eligibility is determined by the local Board of Review
• Each local unit sets income and asset guidelines (often based on federal poverty levels)

Key Features

• Can result in partial or full property tax relief
• Must be applied for every year

How to Apply

• Submit an application and supporting documentation (income, assets, hardship information)
• File with your local assessor or Board of Review by local deadlines

3. Disabled Veteran Property Tax Exemption

Michigan provides one of the most generous property tax exemptions in the country for disabled veterans.

What It Does

• Fully exempts the homestead from property taxes

Who Qualifies

• Michigan resident who:
  • Is a disabled veteran determined by the U.S. Department of Veterans Affairs to be permanently and totally disabled due to service, or
  • Is an unremarried surviving spouse of a qualifying veteran
• Property must be owned and used as the veteran’s primary residence

Important Note

• This exemption generally requires annual filing with the local assessor

4. Charitable and Nonprofit Organization Exemptions

Certain properties are exempt from property taxes based on ownership and use, including:

• Nonprofit charitable organizations
• Religious institutions
• Educational institutions
• Government-owned property
• Schools and certain healthcare facilities

The property must be used primarily for its exempt purpose, and documentation is required.

Michigan Homestead Property Tax Credit (Not an Exemption)

While not a direct exemption, the Homestead Property Tax Credit is one of Michigan’s most valuable forms of property tax relief.

Who Can Claim It

• Low- to moderate-income homeowners and renters
• Seniors may qualify for higher credit amounts

How It Works

• The credit is refundable, meaning you can receive money back even if you owe no tax
• Based on how much your property taxes (or rent) exceed a percentage of your household income

Credit Amount

• Up to $1,200 for eligible seniors
• Amount varies based on income, taxes paid, and household size

How to Claim

• File Form MI-1040CR with your Michigan individual income tax return

Important Things to Know

• Exemptions vs. Credits
  • Exemptions reduce or eliminate property taxes upfront
  • Credits refund part of the taxes you already paid
• Not Automatic
  • Most exemptions require applications, and some must be renewed annually
• Residency Matters
  • Many benefits apply only to your principal residence

Recommendation: File and Apply Electronically When Possible

Michigan strongly encourages electronic filing and online submission whenever available. Using electronic filing is recommended because it:

• Reduces errors and missing information
• Speeds up processing and confirmations
• Ensures accurate calculation of credits, such as the Homestead Property Tax Credit
• Provides proof of timely filing
• Makes it easier to update or renew exemptions

When claiming the Homestead Property Tax Credit, e-filing your Michigan income tax return is the fastest and most reliable way to receive your refund.

Key Takeaway

Michigan offers meaningful property tax relief through exemptions and credits, especially for homeowners, low-income residents, seniors, disabled veterans, and nonprofits.

However, most benefits require timely applications or annual tax filing. Filing electronically helps ensure you receive every dollar of relief you qualify for.