Summary of House Bill 5572 (Session 2025-2026) — Michigan
Jurisdiction: Michigan
Bill: HB 5572
Topic: Property tax exemptions for real and personal property owned and occupied by nonprofit corporations
Amends: 1893 PA 206 (The General Property Tax Act), Sec. 7o (MCL 211.7o)
Purpose and Intent
- To modify the scope and conditions under which real and personal property owned and occupied by nonprofit corporations is exempt from property taxes under the General Property Tax Act.
- Specifically targets certain nonprofit entities (e.g., nursing homes, continuing care communities) and clarifies terminology and eligibility criteria.
Key Provisions and Changes (as introduced)
1) Existing Exemption Structure (Retained and Clarified)
- The bill continues exposure to exemption for real or personal property owned and occupied by:
- A nonprofit charitable institution or charitable trust that uses the property solely for its stated charitable purposes.
- A nonprofit charitable institution or charitable trust that leases or makes the property available to another nonprofit or to a nonprofit hospital or educational institution, provided occupancy and use align with the purposes for which the lessor was organized.
- A government entity under certain conditions (e.g., property would be exempt if owned under Section 7m and used by the government, with related occupancy/organizational purpose conditions).
2) Post-1997 Exemption for Government Leased Property (Retained with Conditions)
- For taxes levied after December 31, 1997, property leased to a governmental entity remains exempt if:
- It would be exempt under Section 7m if owned or acquired via installment purchase by the lessee government.
- It would be exempt if occupied by the lessor nonprofit solely for its purposes.
3) Qualified Conservation Organization Exemption (New/Expanded)
- Real property held by a qualified conservation organization for conservation purposes and open to all state residents for educational or recreational use is exempt.
- Definitions and criteria for “qualified conservation organization” include:
- Organized to acquire and protect nature sanctuaries/preserves in Michigan.
- Perpetual hold requirement unless property is no longer suitable or sale is approved by a majority vote of members/trustees.
- Prohibitions against benefiting from sales by any officer, board member, or related family member.
4) Chief Executive Officer Residence Exemption (Local Authority)
- With a local tax collecting unit’s resolution, property used as the CEO’s principal residence (contiguous to the nonprofit’s primary business property) could be exempt as part of employment conditions.
5) Charitable Home and Related Entities (Clarification)
- Maintains exemption for a charitable home of a fraternal or secret society or a nonprofit corporation wholly owned by a religious/fraternal society that owns/operates facilities for the aged and chronically ill, with net income not inuring to residents.
6) Expanded and Clarified Eligibility for Nonprofit Corporations (8th Subsection)
- Real and personal property owned and occupied by a nonprofit corporation that:
- Is exempt from federal 501(c)(3) taxation, and
- Is a nursing home, skilled nursing facility, home for the aged (licensed under relevant health codes), adult foster care facility, or continuing care community, or provides housing/health-related services to disabled persons
- The property qualifies under either:
- The exemption status on the date of the amendatory act or
- A continued exemption since December 31, 2004 with no ownership transfer since then (or per an alternative date) and with specific transfer definitions.
7) Ongoing Provisions and Definitions
- Subsection (9) preserves a path for nonprofits not eligible under (8) to still apply for exemption under subsection (1).
- Subsection (10) provides defined terms:
- “Charitable trust”
- “Governmental entity”
- “Public school academy”
7-8 Coherence and Terminology
- The bill also updates terminology by consistently referring to "nonprofit charitable institution" in places where “charitable nonprofit institution” may have appeared, aligning phrasing with the rest of Section 7o.
Fiscal and Administrative Impacts
- Estimated Revenue Impact: Net reduction in state and local property tax revenue.
- State and local: Approximately $7.0–$8.0 million total.
- School Aid Fund (SAF): Revenue loss of about $1.0–$1.5 million; SAF costs increase by about $100,000.
- Local governments (cities, counties, school districts, libraries, etc.): Revenue loss in the range of $6.0–$7.0 million.
- The SAF would face higher costs due to reduced local tax revenues, affecting per-pupil foundation allowances.
- The analysis notes that HB 5573 (separately introduced) would also alter exemptions, potentially broadening eligibility and affecting revenues/expenditures in unknown amounts.
Effective Dates
- The bill as introduced does not specify an immediate operative date beyond the general law amendments; it would become law upon passage and signing, with effects potentially starting on the specified tax years (taxes levied after 1997 for some provisions).
Who Would Be Affected
- Nonprofit charitable institutions and charitable trusts that own and occupy property used for specified charitable purposes (hospitals, nursing facilities, continuing care communities, housing/health services for disabled persons, etc.).
- Nonprofit corporations exempt under 501(c)(3) that operate nursing facilities, continuing care communities, adult foster care, or related services.
- Municipalities and local taxing authorities, school districts, and the School Aid Fund (as revenue shifts occur).
- Qualified conservation organizations that protect natural habitats and open properties for public use.
Procedural/Timelines
- Introduced and referred to the House Committee on Finance (February 24, 2026).
- Fiscal analyses prepared by the House Fiscal Agency (HBs 5572 and 5573 as introduced).
Notes
- HB 5572 would modify the scope and conditions of exemptions, with notable changes to eligibility criteria and to how certain organizations (nursing homes, continuing care communities, and conservation groups) qualify.
- HB 5573 would create a separate definition for “nonprofit charitable institution” (501(c)(3) exemption basis) with broader potential implications for exemption eligibility.
