Tax Abatements
Learn about tax abatements available for business expansion.
Industrial Property Tax Abatement (P.A. 198 of 1974)
Property tax incentives are available to eligible businesses to renovate or expand aging manufacturing plants or to build new plants. They can reduce property taxes (real and personal) for up to 12 years. For an obsolete plant or machinery that is being replaced or restored this results in a 100% exemption from the property tax on the value of the improvement. The Industrial Facilities Tax (IFT) on a new plant and/or machinery and equipment is computed at half the local property tax millage rate, plus the 6-mill statewide education tax. This amounts to a reduction in property taxes of approximately 50%.
Personal Property, Tax Abatement (P.A. 328 of 1998)
Eligible distressed communities may abate all new personal property taxes in certain geographic areas to spur economic development. Abatements include all millage, state and local. Eligible projects include manufacturing, mining, research and development, wholesale trade, and office operations, but not retail businesses.
Obsolete Property Rehabilitation Act (P.A. 146 of 2000)
Michigan adds another avenue for property owners, buyers, developers, lenders and local units of government to promote redevelopment projects in eligible distressed areas. This program is designed to complement brownfield redevelopment activities.
The Obsolete Property Rehabilitation Act provides an exemption for ad valorem property taxes to commercial property and commercial housing property if an obsolete property rehabilitation district has been established and is located in a qualified local governmental unit (Core Community).
Authorized qualified local governmental units (QLGUs) may establish obsolete property rehabilitation districts. Buildings and improvements within these districts are eligible for exemption for ad valorem property taxes from 1 to 12 years. Personal property is not eligible. The sunset for granting exemption is December 31, 2010.
To qualify, the property must be commercial property or commercial housing property that is a "facility" (contaminated), "blighted," or "functionally obsolete."
Additional Property Tax -Abatement/Exemption information is available on the Michigan Department of Treasury Web site.