Calculating Your Michigan Property Taxes

Taxable Value (TV) is multiplied by your municipal millage and divided by 1,000 which will equal your property tax bill in dollars. Here’s how to understand your property taxes:   

Taxable Value vs. Assessed Value

Until 1994, real property in Michigan was assessed at half its market value for tax purposes. This is known as a property’s assessed value (AV). In 1994, Michigan voters passed Proposal A, which changed the State Constitution to lower property tax bills.

 Proposal A

This Constitutional amendment shifted some of the tax burden from real property to retail sales tax which rose from 4 to 6 cents on every dollar spent. This proposal calculated property taxes using the property’s Taxable Value (TV). TV is determined by: last year’s TV) - losses + the lesser of 5.0% or the rate of inflation + additions. Under Proposal A, the increase in a property’s TV is limited, or "capped" with annual increases of not more than the lesser of 5% or the inflation rate.

 Uncapping

When property is sold, the property’s TV usually becomes equal to the amount of its assessed value for the tax year following the year in which the sale or transfer took place; both the new AV and TV are usually set at one half of the property’s selling price. This is called "uncapping" of property. For unsold properties, and for subsequent tax years, the increase in TV usually becomes the lesser of 5% or the inflation rate. There are special rules/forms for the agricultural exemption and possible uncapping of AG property.

 Finding your TV

The TV for parcels may be found on the parcel owner’s Assessment Notice (mailed during February), the property record card, and on your summer and winter tax bills. Even though taxes are based on TV, the assessed value is calculated each year so that property values can be uniformly assessed at 50% of market value, as required by the Michigan Constitution.

 What’s a Mill?

The property tax rate in Michigan is referred to as millage. One mill is equal to 1/1,000 of a dollar. For every $1,000 in taxable value, a property owner will pay $1 in property tax. Property owners can calculate their tax bill by multiplying their taxable value by the number of mills assessed the local millage rate.

 Administration Fee

In addition to your property tax payment, there may also be assessed an additional 1% administrative fee (a percentage of the property tax you would pay).