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HB 5573

Property tax: other; definition of nonprofit charitable institution; provide for. Amends sec. 7o of 1893 PA 206 (MCL 211.7o).

2025-2026 Regular Session Introduced by Brian BeGole and 10 co-sponsors

Expands Michigan property tax exemptions for 501(c)(3) nonprofit charitable institutions, broadening eligibility for certain care, housing, and other facilities.

bill electronically reproduced 02/24/2026
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Bill Summary · HB 5573

Summary of House Bill 5573 (2025-2026) — Michigan

Jurisdiction: Michigan | Bill Type: Amends General Property Tax Act (1893 PA 206) | Topic: Property tax exemption for nonprofit charitable institutions

1) Purpose and Intent

  • HB 5573 defines “nonprofit charitable institution” and expands or clarifies the scope of property tax exemptions under the General Property Tax Act (MCL 211.7o).
  • The bill aims to align terminology and potentially broaden exemptions for certain nonprofit entities organized and exempt under 501(c)(3) of the Internal Revenue Code.

2) Key Provisions and Changes

A. Definition

  • Adds a clear definition:
    • A “nonprofit charitable institution” means a Michigan nonprofit corporation that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code.

B. Exemption Scope (Section 7o, summarized)

The bill preserves and organizes the existing exemption framework, with emphasis on real or personal property owned by nonprofit organizations being exempt if used for the purposes for which the organization was formed. The main subsections describe exemptions for:

1) Property used by the nonprofit for its stated charitable purposes (occupancy by the nonprofit itself).
2) Property owned by a charitable trust used for its charitable purposes.
3) Property leased or otherwise made available to other nonprofit entities, or to a nonprofit hospital or nonprofit educational institution, so long as occupancy is for the purposes for which those entities were organized and would have been exempt if used by the lessor.
4) Property leased or made available to governmental entities (post-1997 taxes) under conditions:
- The property would be exempt under section 7m if the lessee governmental entity were purchasing under an installment agreement.
- The property would be exempt if occupied by the lessor for its purposes.
5) Exemption for real property owned by a qualified conservation organization open to the public for educational or recreational use, with detailed qualification criteria (nature preservation purpose, perpetuity hold, and prohibitions on selling property for personal gain by officers/board/trustees or their family members).
6) Exemption for property used by the nonprofit CEO as a principal residence if authorized by the local tax collecting unit and contiguous to the nonprofit’s principal place of business.
7) Exemption for charitable homes of fraternal/secret societies or nonprofit corporations owned by religious/fraternal societies operating facilities for the aged and chronically ill, where net income does not inure to residents.
8) Expanded exemption for certain 501(c)(3) nonprofit corporations:
- Includes skilled nursing facilities or adult foster care facilities licensed under Michigan law, or facilities that provide housing, rehabilitation, diagnostic, medical, or therapeutic services to disabled persons (with the definition of “disabled person” aligned to state law).
- Ownership/transfer timing provisions tie to historical exemption treatment (as of January 10, 2007, or December 31, 2004 with no ownership transfer since then).
9) If a nonprofit is not eligible under subsection (8), it can still apply for exemption under subsection (1) (the general exemption for the nonprofit occupying its own property).

C. Other Provisions

  • Subsection (6) allows local tax collecting units to authorize exemption for property used by the nonprofit CEO as a principal residence if contiguous to the nonprofit’s main property and for employment conditions.
  • Subsection (9) clarifies that if a property isn’t eligible under one exemption pathway, it can still seek exemption under the general occupancy exemption.

3) Affected Parties and Impacts

  • Whose property could be exempt:
    • Michigan nonprofit charitable institutions that are 501(c)(3) organizations.
    • Charitable trusts.
    • Nonprofit hospitals, nonprofit educational institutions, skilled nursing facilities, adult foster care facilities, and certain housing/health services providers for disabled persons.
    • Qualified conservation organizations (nature sanctuaries, preserves, etc.) that meet criteria for perpetual hold and open public use.
    • Government-owned or -occupied properties under lease to nonprofits (subject to conditions).
    • Chief executive officer residences of nonprofits, if authorized locally.
  • Beneficiaries:
    • Local governments, school districts, counties, and other tax authorities due to potential reductions in property tax revenue.
    • School Aid Fund (SAF) due to changes in revenue sharing and foundation allowance implications.
  • Potential fiscal effects:
    • HB 5573 could broaden exemptions, reducing state and local property tax revenue and potentially shifting some costs to SAF expenditures, depending on how many properties qualify.

4) Procedural and Timeline Aspects

  • Status: Introduced and referred to House Committee on Finance (as of February 2026).
  • Effective dates: The bill references ongoing IRS 501(c)(3) status and existing exemption frameworks; no new sunset or explicit effective date provided in the summary excerpt. Some provisions reference historical treatment dates (e.g., January 10, 2007; December 31, 2004) for eligibility criteria.

5) Summary in Plain Language

HB 5573 clarifies and formalizes what qualifies as a nonprofit charitable institution for Michigan property tax exemptions and may broaden eligibility to include more entities (notably some nursing/continuing care and disability-service providers) that are 501(c)(3) nonprofits. It also retains several nuanced exemptions (e.g., for property used by nonprofits, leased to other eligible nonprofits, to governmental entities under specified conditions, conservation land, and CEO residence allowances). The measure could reduce local and state property tax revenues and alter School Aid Fund costs, depending on how many properties become exempt under the expanded definitions.

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

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