Property Taxes

The property tax is Michigan’s oldest form of taxation, dating back to 1893. Michigan’s property tax is assessed at the state and local levels, and abatements are allowed at both levels. The taxable value of property is 50% of current market value, including both real and personal property. Annual property assessment increases are limited to the lesser of 5% or the rate of inflation.

In 1994, Michigan reduced its reliance on property taxes to fund schools and lowered its personal income tax. Under the new property tax system, businesses pay 24 mills in school property taxes, an average 30 percent reduction from previous tax levies.

Michigan’s per person property tax burden is now 14.8 percent below the national average.

Inventory, special tools, dies and jigs and most pollution abatement equipment are exempt from property taxes. In Michigan, only businesses pay a personal property tax for items not permanently affixed to land.

For the first time in 30 years, the state revised its personal property tax depreciation tables to allow faster depreciation of certain types of equipment. The changes are expected to save Michigan businesses about $140 million.

Property tax abatements of up to 12 years are available in Michigan. These abatements reduce property tax liability on buildings, machinery and equipment by 50 percent for new facilities, and by 100 percent of the new value of a rehabilitation of existing property. These abatements can be granted as local and state levels.

The statewide average property tax rate for commercial, industrial, and utility property was 50.82 mills in 2000.

(Source: Detroit Regional Economic Partnership and Michigan Economic Developement Corporation)