Michigan Homestead Property Tax Credit for Veterans

This is the other Michigan property tax benefit, and it is worth recording mainly so that a reader can see how small it is next to the exemption in 211.7b. Section 206.522(1)(d) lets an eligible serviceperson, eligible veteran, or eligible widow or widower claim a credit against state income tax for a percentage of the property taxes on the homestead, not exceeding 100 percent, computed by dividing the taxable value allowance in 206.506 by the taxable value of the homestead. A renter divides 23 percent of the annual rent by the property tax rate instead. The allowances are a table in 206.506 and they run from $2,500 to $4,500. A veteran with a service-connected disability rated 10 to 50 percent has an allowance of $3,500; 60, 70 or 80 percent gives $4,000; 90 or 100 percent gives $4,500. A pensioned veteran or the veteran's widow or widower gets $3,500 with no percentage requirement. The widow or widower of a veteran who died in service gets $4,500. A current serviceperson gets $3,500. What that produces. Michigan taxable value is roughly half of market value, so a $250,000 house has a taxable value near $125,000. The highest allowance in the table, $4,500, divided by $125,000, is 3.6 percent of the property taxes. On a $4,000 tax bill that is about $144. The table was last amended in 1996 and the allowances have never been indexed, so the credit shrinks in real terms every year that house values rise. Who it reaches that the exemption does not. Any compensable rating from 10 percent upward, a pensioned veteran with no rating at all, a serviceperson currently serving, and a widow or widower. The exemption in 211.7b is limited to permanent and total, specially adapted housing, or unemployability, so this credit is the only property tax benefit available to the large majority of Michigan veterans. The income test and its exception. Section 206.506 applies to a serviceperson, veteran, or widow or widower whose income is not more than $7,500 per year, unless the person receives compensation from the Veterans Administration or the armed forces for service-incurred disabilities. That exception swallows the rule for anyone drawing VA compensation, and a veteran reading the $7,500 figure alone would wrongly conclude they are out. A claimant who qualifies both ways takes one credit, not both, and the general homestead credit for a senior, a paraplegic, a totally and permanently disabled claimant or a blind claimant under 206.522(1)(c) may be larger. Section 206.522(3) allows only one claimant per household.