Determination of Tax Rate

Once a property’s taxable value has been calculated, the appropriate tax rate — or millage — must be determined. This rate will depend on the property’s tax category.

Recall that for personal property, this category is one of five classifications: residential, agricultural, commercial, industrial or utility property.[xxv] Similarly, for real property, the category is one of six classifications: residential, agricultural, industrial, commercial, timber cutover and developmental property.

Real property is classified as either "homestead" or "nonhomestead." A "homestead" property is a residential parcel that is a taxpayer’s primary dwelling within the state;[xxvi] the category does not include Michiganians’ secondary in-state residences or "summer cottages." Homestead property also includes some qualified agricultural properties. "Nonhomestead" properties, in contrast, are those that do not qualify as homesteads.

Tax rates for real property and personal property are measured in units called "mills." One mill equals one-tenth of one cent per dollar of taxable value, or equivalently, one dollar per thousand dollars of taxable value. In decimals, 1 mill would be expressed as 0.001.

For example, nonhomestead property is typically subject to a maximum local school operating property tax of 18 mills.[38] Local millage rates, or the number of mills applied to a property, are determined by property type and the purpose of the tax. The various state and local millage rates are discussed beginning with"Local Property Taxes by Type," and in subsequent sections dealing with state taxes for education.

[xxv] See Local Government.

[xxvi] Excepting military personnel, if a Michigan property owner has filed an income tax return as a resident in another state, that person — for example, a civilian Michigan summer home owner who does not permanently reside in Michigan — is not eligible for the homestead exemption; see MCL § 211.7cc(3)(d).