Michigan Legislative Update – November

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Michigan State Capitol (Credit: Jan Davis Ruthig)

Michigan State Capitol (Credit: Jan Davis Ruthig)

This is our monthly legislative update tailored for Michiganders who work on challenges related to vacancy, abandonment, and community development. We’re tracking bills in the state legislature to help you stay in the loop on relevant policy activity!

Homestead Property Tax Credit

With the passage this week of the Road Funding Package in Michigan, a number of changes to the state Homestead Property Tax Credit will take effect beginning in 2018, increasing the amount of the tax credit and increasing the number of residents who qualify for the tax credit.

The Homestead Property Tax Credit is one of several forms of tax relief available in Michigan to help encourage home ownership and reduce the tax burden of low-income individuals. The Homestead Property Tax Credit allows qualifying homeowners to credit a portion of their property tax payment against their state income tax liability. The credit also allows qualifying renters to credit a portion of their rent against their state income tax liability. Other forms of tax relief available in Michigan include the Principal Residence Exemption (a property tax exemption for eligible homeowners), the Neighborhood Enterprise Zone Act (a property tax exemption for the purchase or rehabilitation of homes in an eligible distressed community), and the Poverty Exemption (a property tax exemption for homeowners experiencing financial hardship).

Below is a brief summary of the changes passed to the Homestead Property Tax Credit (changes take effect beginning the 2018 tax year unless otherwise noted):

– The $135,000 cap on property value will increase each year beginning in the 2021 tax year.

– The income cap per claimant will increase from $51,000 to $61,000. (The $61,000 income cap per claimant will increase each year beginning in the 2021 tax year.)

– The $1,500 maximum credit amount will increase each year beginning in the 2021 tax year. (Maximum amount of the credit will increase from $1,200 to $1,500.)

– The method of calculating the tax-credit amount for each taxpayer will change in 2018, resulting in higher tax credits per taxpayer.

Be sure to consult with your local tax professional or attorney on how these changes might affect your state income tax return.

Updated Legislation

Since our October 2015 update, the legislature advanced five bills we are tracking. We have organized the legislative updates under the following categories for ease of reference. Please note that the categorization is approximate and subject to change as bills move through the legislative process.

Property Tax

Exemptions/Credits

House Bill 4370 (Passed – Public Act 179) – Expands the homestead income tax credit as part of the state road-funding package. Signed into law by Governor Snyder on Nov. 10, 2015.

House Bill 4871 (Pending, Floor of the House) – Would expand the homestead income tax credit. Approved by the House Committee on Tax Policy on Oct. 21, 2015.

Notice of Delinquency

Senate Bill 349 (Pending) – Would clarify when country treasurers may send the June 1 and September 1 notices of delinquent property taxes. Passed the House (105-0) on Oct. 29, 2015.

House Bill 4039 (Passed – Public Act 190) – Allows county treasurers to publish notice of delinquent property taxes in publications other than newspapers, or online if no print publication is circulated in the county where the property is located, and authorizes that publication be made only twice (for two weeks) instead of three times (for three weeks). Signed into law by Governor Snyder on Nov. 16, 2015.

Local Government

Senate Bill 394 (Pending, House Committee on Local Government) – Would amend state law to allow smaller municipalities (by population) to do rental inspections under Michigan Housing Law. Passed the Senate (38-0) on Nov. 5, 2015.