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HB 4088

Individual income tax: property tax credit; taxable value cap on homestead eligibility for credit; increase and modify adjustment factor. Amends sec. 520 of 1967 PA 281 (MCL 206.520).

2025-2026 Regular Session Introduced by Joey Andrews and 7 co-sponsors

The bill raises the homestead tax-credit eligibility cap to $196,500 for 2025 and later ties future cap increases to the FHFA House Price Index.

referred to second reading
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WeVote Research Nonpartisan
Bill Summary · HB 4088

Summary — HB 4088 (Income Tax: Homestead Property Tax Credit — taxable value cap and adjustment factor)

Status: Referred to second reading
Introduced: Early 2025 (sponsored by Rep. Bradley Slagh; co-sponsors include Dave Severin, Brad Halbrook, Charles Meier, Paul Jacobs, Patrick Windhorst, Regan Deering, Kevin Schmidt)

Purpose

HB 4088 amends section 520 of Michigan’s Income Tax Act to (1) raise the maximum taxable value of a homestead that qualifies for the homestead property tax credit and (2) change the index used to adjust that maximum in future years.

Key provisions

  • Sets a one-time taxable-value cap for homestead eligibility at $196,500 for the 2025 tax year.
  • Beginning with the 2026 tax year and thereafter, the cap will be adjusted annually by the percentage change in the U.S. House Price Index (HPI) as published by the Federal Housing Finance Agency (FHFA), replacing the current adjustment using the U.S. Consumer Price Index (CPI).
  • The adjusted cap is rounded to the nearest $100 and the Department of Treasury shall annualize the amount as necessary.
  • Retains existing definitions and eligibility structure for the homestead property tax credit (e.g., Michigan residency, household income thresholds that are otherwise adjusted annually, and taxable value as defined under section 27a of the General Property Tax Act).
  • Other provisions of section 520 regarding renter credits, senior credits, reductions for public assistance, and income/resource thresholds remain in place as currently written (no substantive changes in HB 4088 summary).

Who is affected

  • Primary beneficiaries: homeowners whose homestead taxable value falls between the prior cap and the new $196,500 cap (or who will qualify as the cap grows under HPI indexing). This will expand eligibility for the credit.
  • Renters/lessees are not directly changed by the cap increase, though overall program costs could influence future policy.
  • State fiscal accounts: general fund revenues.

Fiscal and policy impact

  • House Fiscal Agency estimates a general fund revenue reduction of roughly $30 million to $40 million annually from the change.
  • Changing the inflation adjuster from CPI to HPI likely causes the cap to grow faster over time. Example: between 2014–2024 CPI rose ~32.5% while HPI rose ~100.3%, implying more rapid expansion of eligibility and larger future revenue effects.
  • Background context: for tax year 2023 about 1.1 million filers claimed the property tax credit totaling $849.4 million (average credit ~$775).

Timing / implementation

  • The bill sets the $196,500 taxable-value cap for the 2025 tax year; HPI indexing would begin for the 2026 tax year and each year after.
  • Procedural status: introduced in early 2025 and currently referred to second reading.

For more detail, see section 520 of the Income Tax Act (MCL 206.520) and FHFA HPI data.

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

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