🏡 Understanding Property Taxes in Michigan

A Complete Guide to SEV, Uncapping, Millage Rates & Tax Breaks (Including Veteran Exemptions)

If you’re buying or selling a home in Michigan—or just trying to understand your property tax bill—you’ve probably realized: it’s not exactly simple.

This guide breaks down how property taxes work in Michigan, what happens when a home sells, how values are determined, and what kinds of exemptions are available (like for 100% disabled veterans). Whether you’re a buyer, a long-time homeowner, or helping a family member, this page is designed to make the process clearer.

📊 How Property Taxes Are Calculated in Michigan

In Michigan, your annual property tax bill is calculated like this:

Taxable Value × Millage Rate = Annual Property Taxes

Taxable Value is based on the SEV, but can be limited by law (see “capping” below).
Millage Rate is the tax rate for your local area, usually between 30 and 50 mills.
1 mill = $1 in tax per $1,000 of taxable value

🔢 Example Calculation

Say your home has a taxable value of $100,000 and your area has a millage rate of 40 mills:

$100,000 × 0.040 = $4,000 per year in property taxes

Or:

$100,000 ÷ 1,000 = 100 units
100 × 40 = $4,000

✅ That’s your estimated tax after uncapping (explained below).

🧮 SEV vs. Taxable Value vs. Assessed Value

Term	What It Means	Notes
Market Value	What the home is worth today	Based on assessor’s estimate, not your purchase price
Assessed Value (AV)	50% of market value	Set by local assessor
State Equalized Value (SEV)	Verified AV	Becomes your taxable value when a home is uncapped
Taxable Value (TV)	What you’re actually taxed on	Limited by Proposal A rules until ownership changes

🔓 What Happens When You Buy a Home? (Uncapping)

In Michigan, when you buy a property, the taxable value is “uncapped” the following year—this means it resets to equal the SEV, which is typically 50% of the assessor’s market value.

This can cause a big jump in taxes if the home has had the same owner for many years.

❗ You don’t pay based on what you paid for the home. The assessor re-evaluates market value and sets the SEV for the following year.

🗓️ Example Timeline:

Year	What Happens	Taxable Value	Taxes
2024	You buy the home	You pay seller’s capped taxes (low)	~$2,500
2025	Value is uncapped to SEV	$100,000	~$4,000
2026+	Value is now capped	Increases slowly each year	~$4,120 (with 3% inflation)

📈 Capping: How Taxes Are Limited Over Time

Once you own the property for a full tax year, Michigan law (Proposal A) kicks in to limit how much the taxable value can increase.

Capped by the lesser of 5% or the inflation rate
Prevents runaway taxes in rapidly appreciating markets
Cap is removed if you sell or add major improvements

This is why long-time owners often have much lower tax bills—even if their homes are worth much more.

❓ The Big Unknown: What Will the SEV Be?

When you buy a home, you won’t know exactly what the SEV will be for next year. The local assessor sets it based on market data and neighborhood trends.

📌 There is no cap or limit on how high the SEV can be set—so taxes can jump significantly after purchase.

How to Prepare:

Review the current SEV and AV in Realist, BS&A, or the local assessor’s website
Ask how much the SEV has increased in recent years
Use the Michigan Property Tax Estimator

📍 Millage Rates: Why Location Matters

Your millage rate is based on:

Your township or city
School district
County-wide and special assessments

Each area has its own rate. For example:

Benton Harbor City: ~53 mills
South Haven Township: ~40–42 mills
St. Joseph City: ~45 mills

🧠 Always multiply your area’s millage rate by your estimated taxable value to get a realistic tax estimate.

🇺🇸 Special Exemption: 100% Disabled Veterans

If you are a 100% disabled veteran, you may qualify for a complete exemption from property taxes on your primary residence.

✅ Who Qualifies:

100% service-connected disabled veteran
Rated individually unemployable and totally disabled
Unremarried surviving spouse of a qualifying veteran
Must own and occupy the home as a principal residence

📋 How to Apply:

File Form 5107 with your local assessor
Submit proof of VA disability rating
Apply before your local Board of Review (usually March, sometimes July/December)

📍 Some municipalities now approve multi-year exemptions—contact your local assessor to confirm your area’s rules.

🔗 Helpful Links:

🧠 Final Thoughts

Understanding Michigan property taxes takes some work, but knowing how SEV, taxable value, millage rates, and uncapping rules operate can save you thousands—and avoid surprises.

Whether you’re buying, selling, or helping someone navigate their next move, I’m always happy to help break it all down.

🙋 Need Help Estimating or Understanding a Tax Bill?