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SB 1044

Individual income tax: property tax credit; definition of homestead; modify. Amends sec. 508 of 1967 PA 281 (MCL 206.508).

2025-2026 Regular Session Introduced by Thomas Albert and 15 co-sponsors

The bill defines how homesteads and rent are calculated for the Michigan property tax credit, including adjustments in non-arm’s-length rentals and expanded criteria for agricultur

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
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Bill Summary · SB 1044

Overview

SB 1044 (2025-2026) from Michigan proposes amendments to the Individual Income Tax Act of 1967, specifically section 508, to modify definitions related to homesteads, gross rent, and related household resources for purposes of the property tax credit. The bill is introduced in the Michigan Senate and referred to the Committee on Finance, Insurance, and Consumer Protection.

Main purpose and intent

  • Update and refine how “homestead” and related terms are defined for the state property tax credit framework.
  • Align gross rent and homestead calculations with evolving use cases (e.g., occupied, unoccupied, or partially occupied properties; agricultural/horticultural land considerations; mobile homes).
  • Clarify treatment of adjacent or contiguous land and certain special cases (e.g., multi-unit buildings, trailers).

Key provisions and changes

  • Gross rent (Sec. 508(1)):

    • Reiterates that gross rent means the total rent contracted to be paid by the renter/lessee of a homestead under arm’s-length terms.
    • Allows the department to adjust gross rent to a reasonable amount if the landlord-tenant relationship is not arm’s length and the charged rent is deemed excessive.

  • Homestead (Sec. 508(2)):

    • Defines a homestead as a dwelling or unit owned and occupied as a home by the owner or occupied by the renter/lessee, including unoccupied real property not classified as commercial/industrial/residential or timber-cut over, owned by the homestead owner.
    • From 1990 onward, excludes unoccupied property leased/rented by the owner to another person if it is not adjacent/contiguous to the owner’s home.
    • Provisions for proportionate taxation when the homestead is part of a larger assessment unit (e.g., commercial, industrial, residential, or multi-dwelling structures).
    • Agricultural/horticultural land considerations:
    • If gross receipts do not exceed household income or there are no gross receipts, rules apply for treating adjacent/contiguous agricultural land as part of the homestead based on the owner’s presence on the land (10 years vs. less than 10 years).
    • For owners on the land for 10+ years, all adjacent/contiguous agricultural lands can be considered part of the homestead with the credit applied to all land.
    • For owners on the land fewer than 10 years, up to 5 acres of adjacent/contiguous agricultural land can be included for the credit.
    • Mobile homes in trailer parks qualify as a homestead, with space site rent treated as the rent of a homestead. The specific tax levied under a referenced statute is treated as a property tax.

  • Household definitions (Sec. 508(3)-(4)):

    • “Household” is defined as a claimant and spouse.
    • “Total household resources” includes all income of household members in the tax year, with certain exclusions (e.g., wrongful imprisonment compensation after 2018) and specified deductions (net business loss, net rental/royalty loss, and net operating loss carrybacks/carryforwards).

Who/what would be affected

  • Taxpayers claiming the Michigan property tax credit related to income taxes, particularly:
    • Homeowners and renters claiming homestead-related credits.
    • Owners of multi-unit buildings, agricultural/horticultural landowners, and those with adjacent land or mobile homes under the described scenarios.
    • Landlords and tenants in non-arm’s-length arrangements where the department may adjust gross rents.
  • The Department of Treasury (or the tax department) would have explicit authority to adjust gross rents in non-arm’s-length situations.

Procedural and timeline notes

  • Status: Introduced (June 18, 2026) and referred to the Committee on Finance, Insurance, and Consumer Protection.
  • No specific dates for enactment or implementation provided in the text excerpt; typical process would follow committee and chamber considerations, potential amendments, and floor votes before any enactment.

Potential impact and considerations

  • Clarifies eligibility and calculation methods for the property tax credit, potentially expanding or narrowing credits based on land use (especially agricultural land) and ownership duration.
  • Provides administrative mechanisms to adjust rents to fair market levels in non-arm’s-length arrangements, affecting taxpayers in those scenarios.
  • Removes ambiguity around mobile homes and trailer parks in determining homestead status and related tax treatment.
  • May influence decisions around land development, land leases, and property tax planning for owners with mixed-use properties.

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

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