Michigan Tax Changes - January 2025
Homestead Property Tax Credit Guidance Update
- Department: Michigan Treasury
- Effective Date: January 8, 2025
- Key Changes:
- Updated guidance on the Homestead Property Tax Credit (HPTC) for adjacent and contiguous properties.
- Corrected the link to the HPTC website and revised FAQs.
- Correct FAQ: Owners can claim taxes on vacant parcels adjacent to their homestead if:
- The owner occupies the dwelling parcel.
- The owner owns the additional parcels.
- The additional parcels are:
- Not classified as commercial, industrial, residential, or timber-cut over.
- Adjacent and contiguous to the dwelling.
- Unoccupied and not rented out during the year.
Class Certification Denied in Takings Clause Case
- Court: U.S. District Court for the Eastern District of Michigan
- Case: Sinclair v. County of Oakland
- Summary:
- The court denied a motion to certify a class action involving former property owners who lost homes due to tax foreclosure and were not refunded surplus equity.
- The court ruled that individual assessments of each property’s fair market value at foreclosure would dominate the case, requiring mini-trials to determine class membership and damages.
- The proposed class failed to meet the requirements of numerosity, predominance, and ascertainability as outlined in Rule 23.
Prepaid Sales Tax Rates
- Note: Additional information on prepaid sales tax rates for fuel is pending.
Michigan Fuels & Minerals Taxes—Michigan amends Motor Carrier Fuel Tax Act definitions.
L. 2025, H5747 (P.A. 219), effective 04/02/2025, amends the Motor Carrier Fuel Tax Act to modify the definition of "qualified commercial vehicle."
Michigan Fuels & Minerals Taxes—Michigan amends motor fuel tax reciprocity provisions.
L. 2025, H5379 (P.A. 218), effective 04/02/2025, amends Public Act (P.A.) 124 of 1960, which establishes the Michigan Highway Reciprocity Board, to: (1) modify the definition of "qualified fuel tax reciprocity agreement" to increase, from 30 air miles to not more than 50 air miles from the state’s border, the range within which a qualified motor vehicle could operate; and (2) modify the definition of "qualified commercial vehicle."
Michigan Property Tax—Michigan amends mileage authority for public transportation authorities.
L. 2025, H6088 (P.A. 236), effective 04/02/2025, amends the Public Transportation Authority Act to no longer allow municipalities within a county with a public transit authority authorized under the Public Transportation Authority Act and a population of at least 1.1 million (Wayne County and Oakland County) to opt out of the county’s public transit authority and to remove the 5-year limit on taxes levied by public transit authorities.
Michigan Sales and Use Tax Rates—Michigan increases maximum allowed convention tourism assessment fee rates.
L. 2025, H6166 (P.A. 235), effective 04/02/2025, amends the Convention and Tourism Marketing Act to increase maximum allowed convention tourism assessment fee rates that can be levied by a convention business and tourism bureau on hotels and other transient facilities in an assessment district to fund a marketing program as folllows: (1) through December 31, 2024, 3% of the room charges in the applicable payment period; (2) beginning January 1, 2025, through December 31, 2030, 3.5% of the room charges in the applicable payment period; and (3) beginning January 1, 2031, 4% of the room charges in the applicable payment period. Currently the fee is capped at 2%.
Michigan Sales & Use Taxes—Michigan amends and extends data center equipment sales tax exemption.
L. 2025, H4906 (P.A. 207), effective 04/17/2025, amends the sales tax exemption for data center equipment by extending the sunset date of the exemption from December 31, 2025 to December 31, 2050. The bill establishes the same sales tax exemption for enterprise data centers, which would generally be data centers that met specific requirements related to capital investment and the creation of new jobs in the state, through December 31, 2050 and establish the same sales tax exemption for an enterprise data center located on a brownfield redevelopment or former electric power plant through December 31, 2065. The bill also allows to data centers on brownfield property or industrial sites once used as a power plant a sales tax exemption of data center equipment sold to either: (1) a qualified entity or its affiliates for assembly, use, or consumption in the operations of an enterprise data center subject to a certificate; or (2) a person engaged in the business of constructing, altering, repairing, or improving real estate for others to the extend the data center equipment was affixed or was made a structural part of an enterprise data center subject to a certificate. The bill provides the Michigan Strategic Fund Board cannot issue any new certificates of exemption after December 31, 2029. This sunset does not affect any existing certificates of exemption in effect on December 31, 2029.
Michigan Sales & Use Taxes—Michigan increases maximum allowed convention tourism assessment fee rates.
L. 2025, H6166 (P.A. 235), effective 04/02/2025, amends the Convention and Tourism Marketing Act to increase maximum allowed convention tourism assessment fee rates that can be levied by a convention business and tourism bureau on hotels and other transient facilities in an assessment district to fund a marketing program as folllows: (1) through December 31, 2024, 3% of the room charges in the applicable payment period; (2) beginning January 1, 2025, through December 31, 2030, 3.5% of the room charges in the applicable payment period; and (3) beginning January 1, 2031, 4% of the room charges in the applicable payment period. Currently the fee is capped at 2%.
Michigan Personal Income Tax—Michigan updates guidance on homestead property tax credit and adjacent and contiguous property.
The Michigan Treasury Department (Treasury) has updated a release providing information regarding availability of the homestead property tax credit (HPTC) for adjacent and contiguous property. The updated notice corrects the link to the Homestead Property Tax Credit website and includes the text of the revised FAQ which has been removed from Treasury's website since the notice was first published. Previously, Treasury had published an FAQ that indicated a homestead for HPTC purposes included all adjacent and contiguous unoccupied property not rented to someone else. That FAQ was incorrect and clearly conflicted with statute. The revised FAQ now reads: "May I claim the taxes levied on my vacant parcels that are adjacent or contiguous to my homestead?" The answer is yes, if the parcels meet the following conditions: (1) the owner must own and occupy the dwelling parcel; (2) the owner must own the additional parcels being claimed; and (3) the additional parcels must not be classified as commercial, industrial, residential, or timber-cut over (Mich. Comp. Laws Ann. § 206.508(2)), must be adjacent and contiguous to the dwelling parcel, cannot be rented to someone else at anytime during the year, and must be unoccupied. (Notice: Homestead Property Tax Credit and Adjacent and Contiguous Property, Mich. Dept. Treas., 01/08/2025.)
Michigan Property Tax—Class certification denied in Michigan Takings Clause case.
The U.S. District Court for the Eastern District of Michigan, Southern Division, denied a former property owner's motion to certify a class action suit involving a Takings Clause violation after the owner's home was foreclosed but the owner was not refunded the surplus equity. The owner sought to certify a class consisting of former Oakland County property owners who lost their property through a tax foreclosure process, where the property was then sold through a right of first refusal program to a local municipality, whose property was worth more than the tax delinquency, and who were never compensated for the surplus equity of their homes. The Court held that the need for an individualized inquiry into the fair market value of each property at the time of foreclosure will predominate over common issues because it will require mini-trials to determine class membership and damages. Because the owner failed to develop a "cognizable common theory for measuring the value in each property at the time of transfer," the proposed class definition failed to meet Rule 23(a) requirement of numerosity, Rule 23(b)(3) requirements of predominance and superiority, and the implied requirement of ascertainability. (Sinclair v. County of Oakland, U.S. Dist. Ct., E.D., Southern Div., Dkt. No. 2:18-CV-14042-TGB-APP, 01/07/2025.)
Michigan Sales and Use Tax Rates—Michigan sets prepaid sales tax rates for fuel for February 2025.
The Michigan Department of Treasury announced that, effective for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 15.4¢ per gallon from the January 2025 rate of 15.8¢ per gallon. Additionally, for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 18.6¢ per gallon from the January 2025 rate of 19.5¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2025-1, 01/07/2025.)
Michigan Sales & Use Taxes—Michigan sets prepaid sales tax rates for fuel for February 2025.
The Michigan Department of Treasury announced that, effective for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 15.4¢ per gallon from the January 2025 rate of 15.8¢ per gallon. Additionally, for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 18.6¢ per gallon from the January 2025 rate of 19.5¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2025-1, 01/07/2025.)
Michigan Sales & Use Taxes—Michigan partial vehicle trade-in sales tax credit increases for 2025.
Beginning January 1, 2025, owners trading in a motor vehicle or trailer coach receive a sales tax credit for the vehicle's trade-in value up to a maximum of $11,000. This is a $1,000 increase from the maximum of $10,000 allowed for calendar year 2024. The partial sales tax trade-in credit increases by law $1,000 annually. Implementation of the sales tax trade-in credit requires new calculations on transactions with a trade-in. The 2025 Trade-In Sales Tax Credit Calculation Worksheet included in the release assists dealers to calculate the trade-in sales tax credit. The 2025 worksheet calculates the correct trade-in sales tax credit, but is not submitted with the Form RD-108 (Application for Title and Registration) to the Michigan Secretary of State. The Secretary has also updated its frequently asked questions (FAQs) (also included in the release) for vehicle dealers to help dealers find answers related to the sales tax trade-in credit. (Trade-in Sales Tax Credit Increase, Mich. Dept. State, 12/27/2024.)
Michigan Fuels & Minerals Taxes—Michigan amends Motor Carrier Fuel Tax Act definitions.
L. 2025, H5747 (P.A. 219), effective 04/02/2025, amends the Motor Carrier Fuel Tax Act to modify the definition of "qualified commercial vehicle."
Michigan Fuels & Minerals Taxes—Michigan amends motor fuel tax reciprocity provisions.
L. 2025, H5379 (P.A. 218), effective 04/02/2025, amends Public Act (P.A.) 124 of 1960, which establishes the Michigan Highway Reciprocity Board, to: (1) modify the definition of "qualified fuel tax reciprocity agreement" to increase, from 30 air miles to not more than 50 air miles from the state’s border, the range within which a qualified motor vehicle could operate; and (2) modify the definition of "qualified commercial vehicle."
Michigan Property Tax—Michigan amends mileage authority for public transportation authorities.
L. 2025, H6088 (P.A. 236), effective 04/02/2025, amends the Public Transportation Authority Act to no longer allow municipalities within a county with a public transit authority authorized under the Public Transportation Authority Act and a population of at least 1.1 million (Wayne County and Oakland County) to opt out of the county’s public transit authority and to remove the 5-year limit on taxes levied by public transit authorities.
Michigan Sales and Use Tax Rates—Michigan increases maximum allowed convention tourism assessment fee rates.
L. 2025, H6166 (P.A. 235), effective 04/02/2025, amends the Convention and Tourism Marketing Act to increase maximum allowed convention tourism assessment fee rates that can be levied by a convention business and tourism bureau on hotels and other transient facilities in an assessment district to fund a marketing program as folllows: (1) through December 31, 2024, 3% of the room charges in the applicable payment period; (2) beginning January 1, 2025, through December 31, 2030, 3.5% of the room charges in the applicable payment period; and (3) beginning January 1, 2031, 4% of the room charges in the applicable payment period. Currently the fee is capped at 2%.
Michigan Sales & Use Taxes—Michigan amends and extends data center equipment sales tax exemption.
L. 2025, H4906 (P.A. 207), effective 04/17/2025, amends the sales tax exemption for data center equipment by extending the sunset date of the exemption from December 31, 2025 to December 31, 2050. The bill establishes the same sales tax exemption for enterprise data centers, which would generally be data centers that met specific requirements related to capital investment and the creation of new jobs in the state, through December 31, 2050 and establish the same sales tax exemption for an enterprise data center located on a brownfield redevelopment or former electric power plant through December 31, 2065. The bill also allows to data centers on brownfield property or industrial sites once used as a power plant a sales tax exemption of data center equipment sold to either: (1) a qualified entity or its affiliates for assembly, use, or consumption in the operations of an enterprise data center subject to a certificate; or (2) a person engaged in the business of constructing, altering, repairing, or improving real estate for others to the extend the data center equipment was affixed or was made a structural part of an enterprise data center subject to a certificate. The bill provides the Michigan Strategic Fund Board cannot issue any new certificates of exemption after December 31, 2029. This sunset does not affect any existing certificates of exemption in effect on December 31, 2029.
Michigan Sales & Use Taxes—Michigan increases maximum allowed convention tourism assessment fee rates.
L. 2025, H6166 (P.A. 235), effective 04/02/2025, amends the Convention and Tourism Marketing Act to increase maximum allowed convention tourism assessment fee rates that can be levied by a convention business and tourism bureau on hotels and other transient facilities in an assessment district to fund a marketing program as folllows: (1) through December 31, 2024, 3% of the room charges in the applicable payment period; (2) beginning January 1, 2025, through December 31, 2030, 3.5% of the room charges in the applicable payment period; and (3) beginning January 1, 2031, 4% of the room charges in the applicable payment period. Currently the fee is capped at 2%.
Michigan Personal Income Tax—Michigan updates guidance on homestead property tax credit and adjacent and contiguous property.
The Michigan Treasury Department (Treasury) has updated a release providing information regarding availability of the homestead property tax credit (HPTC) for adjacent and contiguous property. The updated notice corrects the link to the Homestead Property Tax Credit website and includes the text of the revised FAQ which has been removed from Treasury's website since the notice was first published. Previously, Treasury had published an FAQ that indicated a homestead for HPTC purposes included all adjacent and contiguous unoccupied property not rented to someone else. That FAQ was incorrect and clearly conflicted with statute. The revised FAQ now reads: "May I claim the taxes levied on my vacant parcels that are adjacent or contiguous to my homestead?" The answer is yes, if the parcels meet the following conditions: (1) the owner must own and occupy the dwelling parcel; (2) the owner must own the additional parcels being claimed; and (3) the additional parcels must not be classified as commercial, industrial, residential, or timber-cut over (Mich. Comp. Laws Ann. § 206.508(2)), must be adjacent and contiguous to the dwelling parcel, cannot be rented to someone else at anytime during the year, and must be unoccupied. (Notice: Homestead Property Tax Credit and Adjacent and Contiguous Property, Mich. Dept. Treas., 01/08/2025.)
Michigan Property Tax—Class certification denied in Michigan Takings Clause case.
The U.S. District Court for the Eastern District of Michigan, Southern Division, denied a former property owner's motion to certify a class action suit involving a Takings Clause violation after the owner's home was foreclosed but the owner was not refunded the surplus equity. The owner sought to certify a class consisting of former Oakland County property owners who lost their property through a tax foreclosure process, where the property was then sold through a right of first refusal program to a local municipality, whose property was worth more than the tax delinquency, and who were never compensated for the surplus equity of their homes. The Court held that the need for an individualized inquiry into the fair market value of each property at the time of foreclosure will predominate over common issues because it will require mini-trials to determine class membership and damages. Because the owner failed to develop a "cognizable common theory for measuring the value in each property at the time of transfer," the proposed class definition failed to meet Rule 23(a) requirement of numerosity, Rule 23(b)(3) requirements of predominance and superiority, and the implied requirement of ascertainability. (Sinclair v. County of Oakland, U.S. Dist. Ct., E.D., Southern Div., Dkt. No. 2:18-CV-14042-TGB-APP, 01/07/2025.)
Michigan Sales and Use Tax Rates—Michigan sets prepaid sales tax rates for fuel for February 2025.
The Michigan Department of Treasury announced that, effective for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 15.4¢ per gallon from the January 2025 rate of 15.8¢ per gallon. Additionally, for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 18.6¢ per gallon from the January 2025 rate of 19.5¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2025-1, 01/07/2025.)
Michigan Sales & Use Taxes—Michigan sets prepaid sales tax rates for fuel for February 2025.
The Michigan Department of Treasury announced that, effective for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of gasoline will decrease to 15.4¢ per gallon from the January 2025 rate of 15.8¢ per gallon. Additionally, for the period February 1, 2025 through February 28, 2025, the prepaid sales tax rate for the purchase or receipt of diesel fuel will decrease to 18.6¢ per gallon from the January 2025 rate of 19.5¢ per gallon. The prepayment rates for both gasoline and diesel fuel are set every month by the Department. (Michigan Revenue Administrative Bulletin No. 2025-1, 01/07/2025.)
Michigan Sales & Use Taxes—Michigan partial vehicle trade-in sales tax credit increases for 2025.
Beginning January 1, 2025, owners trading in a motor vehicle or trailer coach receive a sales tax credit for the vehicle's trade-in value up to a maximum of $11,000. This is a $1,000 increase from the maximum of $10,000 allowed for calendar year 2024. The partial sales tax trade-in credit increases by law $1,000 annually. Implementation of the sales tax trade-in credit requires new calculations on transactions with a trade-in. The 2025 Trade-In Sales Tax Credit Calculation Worksheet included in the release assists dealers to calculate the trade-in sales tax credit. The 2025 worksheet calculates the correct trade-in sales tax credit, but is not submitted with the Form RD-108 (Application for Title and Registration) to the Michigan Secretary of State. The Secretary has also updated its frequently asked questions (FAQs) (also included in the release) for vehicle dealers to help dealers find answers related to the sales tax trade-in credit. (Trade-in Sales Tax Credit Increase, Mich. Dept. State, 12/27/2024.)