Home | State Tax Profiles | Tax Calendar | Locations | Client Connect Login

Michigan Personal Property Tax Exemptions Kick In

by Morgan Thomas, Chicago and Randy Davis, Vice President - Specialty Property Tax Services, February 2016

 

The phase out of Michigan's business personal property tax continues. In 2014, industrial and commercial property valued at less than $80,000 became exempt. Now exemptions are also being offered for qualified new and existing personal property.

 

EMPP

 

Taxpayers whose property qualifies as Eligible Manufacturing Personal Property (EMPP) can significantly reduce their tax liability by annually filing Form 5278 by February 20 to claim the exemption.

 

The General Property Tax Act provides tax exemptions for:

 

  • New manufacturing personal property placed in service after December 31, 2012

  • Existing manufacturing personal property placed in service more than 10 years before the current calendar year

ESA

 

While property may be exempt from property tax, EMPP will now be subject to the Essential Services Assessment (ESA).

 

The ESA tax is collected by the State and is calculated as follows:

 

1.

For eligible personal property acquired 1 to 5 years before the assessment year, multiply the acquisition cost of the eligible personal property by 2.4 mills.

2.

For eligible personal property acquired 6 to 10 years before the assessment year, multiply the acquisition cost by 1.25 mills.

3.

For eligible personal property acquired more than 10 years before the assessment year, multiply the acquisition cost by 0.9 mills.

Nearly all taxpayers with eligible manufacturing personal property will have both personal property tax and ESA payments during the next seven years of the transitional period. When the transition concludes in 2023, owners will be fully exempted from paying personal property tax and will only be responsible for the ESA.