The following credits are available to you on your Michigan return:
Homestead Property Tax Credit
You may claim a property tax credit if all of the following apply:
- Your homestead is located in Michigan.
- You were a Michigan resident at least 6 months of the tax year.
- You pay property taxes or rent on your Michigan homestead.
- You were contracted to pay rent or own the home you live in.
You can have only one homestead at a time, and you must be the occupant as well as the owner or renter. Your homestead can be a rented apartment or a mobile home on a lot in a mobile home park. A vacation home or property you use to produce income is not considered your homestead.
Property tax credit claims may not be submitted on behalf of minor children.
You may not claim a property tax credit if your total household resources are over $60,000.
You may not claim a property tax credit if your taxable value is more than $135,000 (excluding vacant farmland classified as agricultural). The credit is computed by reducing by 10 percent - every $1,000 (or part of $1,000) that total household resources are more than $51,000. If filing a part-year return, you must add total household resources for the year to determine if the limit on income is applicable.
Home Heating Credit
This credit assists low income families with their home heating costs payments. To verify if you are eligible to claim a credit, answer the following questions:
- Are you a full-time student who is claimed as a dependent on another person’s income tax return?
- Did you live in a licensed care facility for the entire year?
If you answered yes to either of these questions, you cannot claim a home heating credit. If you answered no to both questions, you may claim a credit if:
- Your homestead is in Michigan, and
- You own a home or have a lease agreement to pay rent for the home you live in,
- You do not live in a college or university-operated housing (including dorms, residence halls, or apartments).
Credit for Taxes Paid to Another State
Income earned by a Michigan resident in a nonreciprocal state or Canadian province is taxed by Michigan, and may also be taxed by the other jurisdiction. If you pay tax to both, you can claim a credit on your Michigan return.
Within your account, the credit is automatically calculated when you enter a resident and nonresident return.
**Exception: Reciprocal States
Residents of reciprocal states working in Michigan, do not have to pay Michigan tax on their salaries or wages earned in Michigan. The following states have a reciprocal agreement with Michigan: Illinois, Indiana, Kentucky, Minnesota, Ohio, and Wisconsin.
If a Michigan resident erroneously had income tax withheld for a reciprocal state on salaries and wages earned there, it is the Michigan resident's responsibility to file a nonresident tax return with that state to get a refund of the tax withheld in error.
To correctly file a return when reciprocity is involved, adjustments to the state returns must be made.
Farmland Preservation Tax Credit
The Farmland and Open Space Preservation Act Tax Credit returns to farmland owners a portion of the property tax they have paid on their farmland. Farmland owners may be eligible for the credit by agreeing to maintain the land as farmland and not develop it for a different use. To qualify, farmers must meet all the following requirements:
- You must own the farmland and
- You have entered into a Farmland Development Rights Agreement (FDRA) with the Michigan Department of Agriculture and Rural Development (MDARD)
To enter these credits within your account, follow the steps below:
- State Section
For more information on these credits, please click here.