HB 4787 Summary – Property tax exemption for qualified replacement electric distribution infrastructure
Overview
- Purpose: Create a targeted property tax exemption for qualifying utility infrastructure replacements (electric distribution) and require annual reporting, while tying the exemption to passage of HB 4788 (a related bill creating the replacement electric distribution infrastructure specific tax act).
- Scope: Applies to taxes levied after December 31, 2025 under the Michigan General Property Tax Act (1893 PA 206). The exemption is subject to a separate “replacement electric distribution infrastructure specific tax act.”
What the bill would do
- Exemption: Allows an exemption from local property taxes for qualified replacement electric distribution infrastructure, starting with taxes levied after 12/31/2025.
- Subordination to a separate tax act: The exemption is granted under Section 7yy but remains subject to the replacement electric distribution infrastructure specific tax act (HB 4788), meaning the overall regime includes both the exemption and a separate tax framework.
Key provisions
1) Eligibility and application
- To qualify, the owner must be using qualified replacement electric distribution infrastructure.
- Owners must apply to the local assessing unit where the property is located.
- Deadline: Applications due by March 1 each year (in a form/manner prescribed by the Department of Treasury).
- Review timeline: Local assessing unit, in coordination with the Department of Treasury, has up to 60 days after receiving a complete, properly filed application to determine qualification and grant the exemption if eligible.
2) Annual reporting
- Exempt property owners must file an annual report by March 31.
- Where to report: Michigan Public Service Commission (MPSC) or the board of directors of the cooperative electric utility (as applicable) and the local tax collecting unit.
- Required content:
- Location and description of the replaced depreciated electric distribution infrastructure and the exempt replacement infrastructure.
- Age and condition of the original infrastructure at the time of replacement.
- Estimated reliability improvements and safety enhancements resulting from the replacement.
3) Definitions and terminology
- Defines terms such as “cooperative electric utility,” “qualified replacement electric distribution infrastructure,” “specific tax,” and “depreciated electric distribution infrastructure” consistent with the related replacement infrastructure tax act.
4) Enactment and tie-bar
- Enacting section states the act does not take effect unless HB 4788 (the replacement electric distribution infrastructure specific tax act) is enacted into law.
- This establishes a formal legislative tie-bar between HB 4787 and HB 4788.
Affected parties
- Owners of qualified replacement electric distribution infrastructure (including cooperative electric utilities and other eligible electric utilities).
- Local assessing units (county or city assessors) and the Department of Treasury (for qualification determinations).
- Public Service Commission or cooperative boards (for annual reporting).
Timeline and procedural notes
- Effective tax year: Taxes levied after December 31, 2025.
- Annual cycle: March 1 (application deadline) and March 31 (annual report).
- Status: Introduced August 21, 2025; referred to Government Operations and later to Energy; rule suspension and related actions occurred in October 2025, indicating ongoing committee consideration.
Fiscal impact (note for readers)
- The exemption reduces local property tax revenue for qualifying infrastructure.
- The exemption is designed to operate in concert with HB 4788’s replacement tax framework; details on fiscal impact would depend on the enacted interplay between the exemption and the specific tax act.
For readers seeking a quick takeaway
- HB 4787 would permanently exempt qualifying replacement electric distribution infrastructure from Michigan property taxes (after 2025), but only if paired with the new replacement infrastructure tax regime (HB 4788) and subject to annual review and reporting by utilities and local governments.
