Individual income tax: property tax credit; owner and eligibility of a homestead placed in certain trusts; clarify. Amends sec. 510 of 1967 PA 281 (MCL 206.510).

2025-2026 Regular Session Introduced by Ron Robinson and 2 co-sponsors

Expands who counts as a homestead owner to include grantors of revocable trusts or QPRTs, preserving eligibility for property tax credits for those homes.

referred to second reading

#individualincometax:propertytaxcredit #probate:trusts

Summary — HB 5235 (2025)

Short title / subject: Clarifies definitions in the Michigan Income Tax Act (1967 PA 281) — specifically the definition of “income” and the definition of “owner” for purposes of property tax credit/ homestead eligibility when a homestead is placed in certain trusts. Amends MCL 206.510 (sec. 510).

Purpose / Intent

The bill clarifies two definitional points in section 510 of the Income Tax Act of 1967:
1. Explicitly allows an individual enrolled in an accident or health insurance plan to deduct from state taxable income the amount of premiums the individual paid during the tax year for that plan covering the individual’s family.
2. Clarifies that an “owner” (for homestead/property tax credit eligibility) is a natural person and explicitly includes a grantor who has placed the homestead into a revocable trust or a qualified personal residence trust (QPRT).

Key provisions

Amends the statutory definition of “income” to explicitly permit a deduction from income for accident/health insurance premiums paid by an individual for family coverage in the tax year.

Updates the definition of “owner” to read (in effect): an individual who owns or is purchasing a homestead (including purchasers under mortgage or land contract, tenant-stockholders of co-op housing, persons purchasing dwellings on leased lands), and specifically includes a grantor who has placed the homestead in a revocable trust or a qualified personal residence trust.

Leaves intact other exclusions from “income” already listed in the statute (examples: first $300 of certain gifts/awards, surplus foods, certain governmental relief and grants, employer contributions to insurance, energy assistance credits, etc.).

Who is affected

Homeowners and homestead claimants: Individuals who transfer their homestead into a revocable trust or a qualified personal residence trust would continue to be treated as the “owner” for purposes of homestead-related credits and eligibility under the income tax statute.

Individual taxpayers paying family accident/health insurance premiums: Those premiums would be deductible from state taxable income under the amended definition.

Probate/trust practitioners and estate planners: Clarifies interactions between trust use and state homestead/property tax credit eligibility.

Procedural status / timeline (as recorded)

Filed: March 14, 2025 (recorded)

Read first time: April 7, 2025

Referred (variously recorded) to Environmental Regulation, Joint Committee on General Law and — per the bill text republication — to the Committee on Judiciary.

Bill electronically reproduced / introduced (as shown in bill text): November 6, 2025 (introduced by Rep. Bill Schuette; also lists Reps. Woolford and Robinson).

Potential impact / notes

Administrative/Revenue: The premium deduction and expanded “owner” clarification could modestly reduce state income tax liability for affected taxpayers and slightly expand eligibility for homestead-related benefits; the fiscal impact would depend on take-up and the number of homesteads placed into trusts.

Legal clarity: Reduces ambiguity about whether placing a homestead into a revocable trust or QPRT would disqualify the grantor from homestead protections and credits under state income tax law.

Implementation: Would operate through interpretation of MCL 206.510 once enacted; agencies administering the property tax credit may update forms and guidance.