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HB 5275

Individual income tax: property tax credit; definition of disabled veteran and exclusion from credit cap; provide for. Amends secs. 506 & 520 of 1967 PA 281 (MCL 206.506 & 206.520). TIE BAR WITH: HB 5272'25

2025-2026 Regular Session Introduced by Joey Andrews and 29 co-sponsors

Raises the homestead property tax credit cap to $165,400 and ties future caps to CPI starting 2026, expanding eligibility for homeowners (including disabled veterans).

bill electronically reproduced 11/12/2025
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WeVote Research Nonpartisan
Bill Summary · HB 5275

Summary — HB 5275 (2025)

Status: Introduced March 14, 2025; electronically reproduced 11/12/2025; last referred to Committee on Government Operations (11/12/2025). Companion: SB 752.

Purpose

HB 5275 amends the Michigan Income Tax Act (1967 PA 281) to (1) align the statute’s definition of “disabled veteran” with the General Property Tax Act and (2) modify eligibility and calculation rules for the state individual income tax property tax credit (the homestead property tax credit), including raising and automatic indexing of the homestead taxable-value cap used to determine owner eligibility. The bill’s title also indicates it provides for exclusion from the credit cap for disabled veterans.

Key provisions (by section)

  • Amends MCL 206.506 (definitions)

    • Defines “disabled veteran” by reference to section 7b of the General Property Tax Act (MCL 211.7b). (This harmonizes the income tax chapter’s definition with the property tax statute.)

  • Amends MCL 206.520 (property tax credit)

    • Increases the taxable-value cap used to determine owner eligibility for the property tax credit from $135,000 to $165,400 (applicable through the 2021–2025 tax years, per the bill text).
    • Requires that, beginning with the 2026 tax year, the taxable-value cap be adjusted annually by the percentage increase in the U.S. Consumer Price Index for the prior calendar year and rounded to the nearest $100. The Department of Treasury is directed to annualize the amount as necessary.
    • Clarifies computation rules for renters’ credits: the credit is based on a percentage of gross rent (language in the bill references 20% for tax years before 2018 and 23% for tax years after 2017).
    • Retains procedural provisions: payment of excess credits after review, assignment of senior citizens’ payments to mortgagors when rent is reduced, anti-discrimination misdemeanor for landlords who alter rents because of a claimant’s credit, and a rule reducing credits for claimants who received certain public assistance by a prorated amount.
    • (Note: the excerpt provided does not include explicit text implementing an exclusion from the cap for disabled veterans; the bill title indicates such an exclusion is intended. The definitional change for “disabled veteran” is present in the excerpt.)

Who is affected

  • Homeowners (claimants for the homestead property tax credit): higher taxable-value cap and future CPI indexing may increase eligibility for the credit.
  • Renters/lessees of homesteads: credit calculation percentages and existing limits remain addressed.
  • Disabled veterans: the bill aligns the statutory definition with the property tax act; the title suggests special treatment regarding the credit cap, but the excerpted text mainly shows the definitional change.
  • Landlords, mortgagees, senior citizens, and Department of Treasury (administration and annual indexing).

Fiscal and administrative impact

  • Likely increases state General Fund costs by expanding eligibility (higher cap and future inflation adjustments). Exact fiscal impact would require Treasury scoring.
  • Administrative duties: Department of Treasury must annualize and adjust the cap using CPI and implement related program changes.

Procedural notes / next steps

  • Introduced in the House (3/14/2025), read and referred to committee. Pending committee consideration and companion action in the Senate (SB 752). Further provisions may appear in sections of the bill not included in the provided excerpt.

Compiled from official sources — confirm details with the bill’s official record.

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