How Much Can Property Taxes Increase in Michigan?

Updated July 2026

Michigan voters passed Proposal A in 1994, creating a system similar to California's Proposition 13. It protects long-time homeowners from rapid tax increases but shifts the burden to new buyers through "uncapping" at sale.

Proposal A is only half of Michigan's tax-limit machinery. The 1978 Headlee Amendment sits underneath it and works on the other side of the equation, limiting millage rates rather than values. Both are still in force in 2026, and they interact in ways that surprise homeowners who only know about the 5% cap.

Understanding how Proposal A works, and where its exceptions sit, can save you thousands in property taxes.

How Much Can Property Taxes Increase Per Year in Michigan? The 5% or Inflation Cap

The Michigan property tax increase cap comes from Proposal A, the 1994 constitutional amendment. For properties that don't change ownership, it limits taxable value increases to the lesser of:

• 5% per year, or
• The inflation rate (Consumer Price Index)

The State Tax Commission publishes the inflation rate multiplier every fall for the following tax year. These are the figures used in the capped value formula:

Note the two-year stretch where the cap actually bit. In 2023 the uncapped inflation figure was 7.9%, and the capped value formula still used 1.05. That 2.9 percentage points of value growth did not disappear, it simply never entered your taxable value. The same thing happened again in 2024. Homeowners who stayed put through those years came out well ahead of the market.

One more thing about the 7.9% figure: the uncapped inflation rate is not useless. It is the number that feeds the Headlee millage rollback calculation, covered further down.

This cap only applies to taxable value, the value used to calculate your taxes. The assessed value (State Equalized Value or SEV) can increase without limit. There is no cap in Michigan law on how fast your assessment can rise, only on how fast the taxed portion of it can rise.

Do Property Taxes Go Up Every Year in Michigan?

For most homeowners, yes. As long as your State Equalized Value stays above your capped value, your taxable value rises by the multiplier every single year, automatically, with no reassessment or notice required beyond the annual assessment change notice. In 2026 that is 2.7%. Nobody votes on it and nothing has to change about your house.

Two situations break the pattern. If your home's market value falls far enough that half of it (the SEV) drops below your capped value, taxable value follows the SEV down, because taxable value is always the lesser of the two. And if millage rates in your jurisdiction fall, through a Headlee rollback or an expiring levy, your bill can drop even while taxable value climbs.

Did Michigan Property Taxes Go Up in 2026?

For capped properties, taxable value went up 2.7% in 2026. That is the whole of the statewide story on the value side: no new cap legislation passed, no change to Proposal A, no change to Headlee. The 1.027 multiplier is a routine annual publication, not a policy shift.

Put next to the prior three years, 2026 is the mildest increase of the group:

• 2024: 5.0% (the cap, because CPI ran hotter)
• 2025: 3.1%
• 2026: 2.7%

Your actual bill can still rise faster than 2.7%, for reasons that have nothing to do with the cap: your millage rate went up because voters approved a new levy or a Headlee override, you lost an exemption, you added new construction (which is added on top of the capped value), or your property uncapped after a transfer.

What Changed in Michigan Property Tax Law for 2025 and 2026

Short answer: one real change, and it landed in 2025.

Disabled Veterans Exemption now renews itself. An amendment to MCL 211.7b took effect January 1, 2025, ending the annual reapplication requirement for the 100% disabled veterans exemption. Before this, a qualifying veteran or surviving spouse had to refile with the local assessor every single year, and a missed filing meant a full year of tax on a property that should have been exempt. Now, once the exemption is granted it stays in place until the owner rescinds it or the assessor denies it. If you or a family member let this exemption lapse in a prior year because of the paperwork, it is worth asking the assessor to reinstate it.

Nothing else has been enacted. Through 2026, no legislation has changed Proposal A's cap or the Headlee Amendment. Several relief proposals aimed at seniors and veterans are pending in the 2025-2026 Legislature, including the HB 4088 line of bills, but pending is not law and none of them affect your 2026 bill. The only 2026 change is the routine inflation rate multiplier of 1.027.

Be skeptical of any claim that a new Michigan law is about to cut your property taxes. The structural limits on your bill are a 1994 constitutional amendment and a 1978 constitutional amendment, and changing either takes a statewide vote, not a bill.

What Is Uncapping of Property Taxes in Michigan?

Uncapping is what happens the year after ownership transfers. The taxable value stops being the old capped figure and resets to the State Equalized Value, which is half of market value. Every year of protection the previous owner accumulated evaporates in one step, and the new owner starts over at current value.

This is why "will my property taxes go up after I buy a house" is one of the most common questions Michigan buyers ask, and why the seller's tax bill is a poor guide to your own. The arithmetic below assumes a total millage of 35 mills, which you would replace with the actual rate from your own jurisdiction:

That is not an error, it is how Proposal A works. The new owner pays taxes on current market value while the previous owner enjoyed decades of capped increases. Before you make an offer, ask the assessor for the property's SEV, not its taxable value, and run your estimate off that number.

What Triggers Uncapping (And What Doesn't)

Transfers that trigger uncapping:

• Sales (including land contracts)
• Adding or removing names from the deed
• Transfers to most trusts
• Transfers to LLCs or corporations
• Gifts (with exceptions)

Transfers that DON'T trigger uncapping:

• Spouse to spouse
• To a trust where you're the sole beneficiary
• Parent to child (if child doesn't own another home and uses it as primary residence)
• Through inheritance to specific family members
• Foreclosure or forfeiture

Understanding Michigan's Property Values

Michigan uses multiple values for property tax purposes:

• Assessed Value: Should equal 50% of true cash (market) value
• State Equalized Value (SEV): Assessed value after equalization
• Capped Value: Previous taxable value × inflation multiplier
• Taxable Value: Lesser of SEV or capped value

Only taxable value matters for your tax bill, but the gap between taxable value and SEV shows how much your taxes would jump if you sold.

Why Is My Property Tax So Much Higher Than My Neighbor's?

Because you almost certainly bought more recently. Two identical houses on the same street, with the same SEV and the same millage rate, can carry wildly different bills purely as a function of when each changed hands. The one that last sold in 2004 has had its taxable value creeping up by a few percent a year ever since. The one that sold last year got reset to half of current market value.

Run the numbers on a pair of homes each carrying a $225,000 SEV in a 35-mill jurisdiction:

• Long-held home, taxable value $125,000: $4,375 per year
• Recently sold home, taxable value $225,000: $7,875 per year

Same house, same assessment, same rate, $3,500 apart. This disparity is not appealable. It is the intended design of Proposal A, and no board of review will fix it. What you can appeal is the assessment itself, and that matters far more to a recent buyer than to a long-time owner, because a recent buyer's bill is computed off the full SEV rather than off a capped number sitting well below it.

Michigan's Principal Residence Exemption (PRE)

Michigan's most valuable exemption is the Principal Residence Exemption, which exempts your primary residence from the 18-mill school operating tax.

You must occupy the home as your primary residence to qualify. Rental properties and second homes don't receive this exemption.

What Is the Property Tax Rate in Michigan?

Michigan has no single statewide property tax rate. Your rate is a millage: the sum of every levy imposed by the units of government whose boundaries your parcel sits inside. That stack typically includes the state education tax, county operating and county-wide services, your city or township, your school district, your community college, your library, and any special assessment districts. Two homes a mile apart, in different school districts, can carry meaningfully different total millage.

A mill is one dollar of tax per $1,000 of taxable value. Because taxable value starts from the SEV, which is only half of market value, a Michigan millage rate is not comparable to an effective tax rate quoted against full market value. A 35-mill jurisdiction charges roughly 1.75% of market value, not 3.5%, and less than that for a long-held home whose taxable value sits below the SEV.

To find your own number, look at the millage summary printed on your summer and winter tax bills, or ask your city or township treasurer for the current rate sheet. Note also that homesteaded and non-homesteaded parcels in the same jurisdiction carry different rates, because the PRE removes 18 mills of school operating tax from the primary residence and leaves it on everything else.

How to Estimate Your Michigan Property Taxes

The formula is short. Taxable value divided by 1,000, multiplied by the total millage rate:

Three cautions when you do this for a home you are considering. Use the SEV, not the seller's taxable value, because yours will uncap. Use the homestead millage only if you will actually occupy the home and file for the PRE. And remember that new construction and additions get added to the capped value on top of the multiplier, so a year with a finished basement or a new garage will move more than 2.7%.

Is the Headlee Amendment Still in Effect?

Yes. The Headlee Amendment, approved by Michigan voters in 1978, remains part of the state constitution and still operates every year. It predates Proposal A by sixteen years and does a different job: Proposal A limits how fast a property's taxable value can grow, while Headlee limits how much a local unit's millage rate can collect.

The mechanism is a rollback. If the total taxable value of a jurisdiction's existing property (excluding new construction) grows faster than inflation, the millage rate is automatically rolled back so the unit does not receive a windfall from rising values. This is why your township's authorized millage and its actual levied millage are often different numbers, and why the levied figure drifts down over time in fast-appreciating areas.

The escape hatch is a Headlee override: a local unit can ask voters to restore some or all of the rolled-back millage. These appear on ballots regularly, often described as a renewal or restoration rather than an increase, because technically the unit is returning to a rate voters already authorized. If your bill rose more than the multiplier and your assessment did not change, a passed override is one of the first things to check.

The two limits stack. Headlee holds down the rate, Proposal A holds down the value, and the product of the two is your bill. Neither one, however, checks whether the assessment underneath is accurate.

Additional Michigan Property Tax Relief

Beyond the PRE, Michigan runs several programs that reduce what you actually pay. They work differently from one another: one is an income tax credit, two are exemptions granted by the assessor, and one is a postponement rather than a reduction.

Michigan Homestead Property Tax Credit

This is a credit claimed on your Michigan income tax return, not something the assessor applies. It refunds part of the property tax you paid when that tax is large relative to your income, and it is refundable, meaning you can receive it even if you owe no income tax. Renters can claim it too, on the portion of rent treated as property tax.

For the 2025 tax year, the thresholds are:

• Total household resources: $71,500 or less
• Taxable value of the home: $165,400 or less
• Maximum credit: $1,900

All three figures are adjusted periodically, so confirm the current year's numbers on the Michigan Department of Treasury instructions before filing. Note the taxable value ceiling in particular: it is a separate gate from income, and a long-time owner in an appreciated neighborhood can be under the income limit and over the value limit.

Disabled Veterans Exemption

Under MCL 211.7b, a veteran rated 100% service-connected disabled is fully exempt from property tax on the homestead. This is a complete exemption rather than a partial reduction, which makes it the largest relief any Michigan homeowner can receive. As of January 1, 2025 it no longer has to be reapplied for each year, covered above.

Poverty Exemption

Local boards of review can grant a partial or full exemption to owners whose income and assets fall below guidelines the local unit adopts. Applications go to the July or December board of review if you missed March. Each jurisdiction sets its own asset test, so the outcome varies by township.

Senior and Disabled Summer Tax Deferment

This one is widely misdescribed. Michigan's statewide deferment does not let you postpone taxes until you sell or die. It postpones the summer tax levy only, for qualifying seniors, disabled residents, and certain other categories under an income threshold, pushing the due date to roughly mid-February of the following year without interest or penalty. You file the deferment form with your city or township treasurer before the summer bill's due date. It is a cash-flow tool, not a lien-until-sale program.

How Michigan Compares to Other States

Michigan's system closely mirrors California's Prop 13 but with a higher cap (5% vs 2%). Both create similar issues: longtime owners pay far less than new buyers for identical homes.

Key Takeaways for Michigan Homeowners

• Annual cap: 5% or inflation, whichever is less. The 2026 multiplier is 1.027, a 2.7% increase
• No cap on assessments: Only taxable value is capped. SEV can rise without limit
• Uncapping at sale: Taxable value resets to SEV the year after ownership transfers
• PRE exemption: Removes 18 mills of school operating tax, worth $1,800 per $100,000 of taxable value
• Transfer carefully: Many common transfers trigger expensive uncapping
• Headlee is still in force: Millage rates roll back when the existing tax base outgrows inflation, unless voters approve an override
• Appeal deadlines: March Board of Review is a mandatory first step for residential property, then July 31 for the Michigan Tax Tribunal. May 31 is the commercial and industrial date, not yours
• Long-term protection: Great for staying put, expensive for moving

Michigan's Proposal A creates predictable tax increases for long-term owners but can shock new buyers with uncapping. Understanding these rules, and the exceptions built into them, helps you plan property transfers and avoid costly mistakes.

Figures and law current as of July 2026. The inflation rate multiplier is published annually by the State Tax Commission, and the Homestead Property Tax Credit thresholds shown are for the 2025 tax year and are adjusted periodically. Board of Review dates are set locally. Confirm current figures with the Michigan Department of Treasury or your city or township assessor before acting.