Michigan Property Tax Bills Are About to Go Up: Brace Yourself for Higher Payments

CEO Khai Intela
Did you know that property tax bills for homeowners in Michigan are about to increase? Thanks to the skyrocketing inflation, residents can expect to see substantial hikes in their summer property tax bills this year....

Did you know that property tax bills for homeowners in Michigan are about to increase? Thanks to the skyrocketing inflation, residents can expect to see substantial hikes in their summer property tax bills this year. And the bad news is that next year's taxes are likely to be even higher. In this article, we'll explore how inflation impacts property taxes in Michigan and discuss what homeowners can expect in the coming years.

How Inflation Impacts Property Taxes in Michigan

Michigan homeowners are facing an inflation rate adjustment of 3.3% for this year's property taxes. While this is less than the maximum 5% allowed under Proposal A, it is the highest rate in about 15 years. The 3.3% increase is the maximum allowable increment in taxable value for homes that have not changed ownership or undergone property additions in the past year. This adjustment comes as a shock to many homeowners who have enjoyed years of low inflation rates.

In comparison, the inflation rate multiplier was only 1.4% for the 2021 tax year and a whopping 3.7% for the 2007 tax year. During periods of low inflation, Michigan homeowners would typically see an annual increase of around 1% in the taxable value of their properties.

How Much Will It Cost You?

The actual cost increase depends on various factors, including the size and value of your home and its location. To give you an idea, consider this example: if your property taxes were $6,000 last year, a 3.3% inflation-adjusted increase would add approximately an extra $200 per year. However, this calculation assumes no changes in millage rates or major property additions.

For a more detailed estimate, let's take a typical Livonia home valued at $125,000 with a taxable value of $125,000 in the 2021 tax year. With a 3.3% inflation adjustment, the taxable value would increase by $4,125 to reach $129,125. This translates to an estimated annual tax bill increase of about $169 for the 2022 tax year.

The overall impact on property taxes can be somewhat hidden as homeowners often focus on other rising costs, such as groceries and gas prices. Many are unaware of the significant financial impact that property tax increases can have.

The Future Outlook

Unfortunately, higher property taxes are not a one-time occurrence. With the current levels of inflation, experts predict an even larger spike in property taxes next year. Many anticipate that the taxable values for homeowners in 2023 could increase by 5%.

While this projection is not yet conclusive, it is a reasonable assumption based on the current inflation trends. The final calculation for the inflation adjustment for the 2023 tax year will consider three more months of future inflation data, which will be published by the Michigan Department of Treasury.

How Does This Adjustment Work?

If you own a home in Michigan and it's your primary residence, increases in taxable value are limited to the change in the inflation rate or a maximum of 5% - whichever is less. However, this limit does not apply if there are property additions or if the property changes ownership. In such cases, the taxable value is reset to the market value, often the sales price.

The presence of Proposal A, a constitutional amendment approved by Michigan voters in 1994, has helped curb property tax increases for long-term homeowners. However, if inflation continues to rise, these homeowners may still experience higher than usual tax hikes.

Prepare Yourself for Higher Property Taxes

It's important for homeowners to pay attention to their property tax assessment notices, which are typically mailed in January. These notices provide an indication of the upcoming year's inflation adjustment and its potential impact on property tax bills. Ignoring these notices can lead to unexpected financial burdens.

Inflation has been on the rise, making it crucial for homeowners to assess how much their property taxes might increase in the future. The assessed value of your home is equal to 50% of its market value. However, the taxable value is often lower, especially for long-term homeowners. Despite the caps in place under Proposal A, if inflation persists, future tax increases are likely to be more significant.

As a homeowner in Michigan, it's essential to stay informed about changes in property taxes and be prepared for potential increases in the coming years. By understanding the impact of inflation and staying updated on official assessments, you can better manage your finances and plan for the future.

Homeowners in Michigan saw the taxable value of their homes go up in 2022, based on a 3.3% inflation adjustment. Experts say the increase could be higher in 2023 and hit 5% next year, given the current levels of inflation. Homeowners in Michigan saw the taxable value of their homes go up in 2022, based on a 3.3% inflation adjustment. Experts say the increase could be higher in 2023 and hit 5% next year, given the current levels of inflation.

In conclusion, homeowners in Michigan should prepare themselves for higher property tax bills in the coming years. The impact of inflation on property taxes cannot be ignored, as rates are expected to increase substantially. By staying informed and understanding the factors that contribute to tax adjustments, homeowners can better manage their finances and plan for the future. Remember, your property tax assessment notice is a valuable resource that should never be ignored. Stay proactive and be aware of how inflation and other factors can affect your financial obligations as a homeowner.

Contact Susan Tompor: [email protected]. Follow her on Twitter @tompor. To subscribe, please go to freep.com/specialoffer. Read more on business and sign up for our business newsletter.

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