Michigan Tax Credits

Just like filing your federal income tax return, certain states have their own income tax return. And just like the federal return, the state return has possible credits to help offset your income for the year. Two of the main credits for Michigan are the Homestead Property Tax Credit and the Home Heating Credit.


Before getting into the property tax credit and the home heating credit it is important to understand homestead. An individual’s homestead is the place where they have a permanent home. The place you plan to return when you go away for a while. And the individual must own and occupy or be contracted to pay rent and occupy the home. An individual only has one homestead at a time. Second homes or other property one owns does not qualify as homestead.

Homestead Property Tax Credit

The purpose of this credit is to help families or individuals who have a household income of $50,000 or less. The credit is based off household income and property taxes paid. The maximum amount for this credit is $1,200. To claim the credit it is as easy as filling out Form MI-1040CR and meeting the qualifications. The qualifications for the credit are as followed:
• Homestead is in Michigan
• Resident of Michigan for at least 6 months
• You own or pay rent on a property in which property taxes were levied
• If you own a home: The taxable value is $135,000 or less
• If you rent a home: Your total household resources are $50,000 or less

If an individual is blind or a veteran, then Form MI-1040CR-2 is also filled out to obtain a large credit amount.

Home Heating Credit

Similar to the Property Tax Credit there are qualifications and a form for the Home heating credit. The form is the MI-1040CR-7 and the qualifications are:
• Michigan homestead
• Own home or contracted to pay rent
• No full-time student who was claimed as a dependent
• Did not live at college or university
• Income is within limits- Shown below in chart

Different from the Property credit the Home heating credit is based off the number of exemptions. With the standard allowance and ceiling goes up with the number of exemptions taken. Below is a chart on the amounts allowed with the income ceiling as well for 2017.

Exemptions               Allowance                            Ceiling
0 or 1                        $465                                  $13,271
2                               $626                                  $17,871
3                               $787                                  $22,471
4                               $948                                  $27,071
5                              $1,109                                $31,671
6                              $1,270                                $36,271
Over 6             +$161 for each additional           +$4,600 additional

Now both the Homestead Property Tax credits and the home heating credit are both great credit for lower income families in Michigan. These should be taken if an individual qualifies for them. However, when couples are married filing separate, some don’t take the credits. With Form 5094, Married Filing Separately and Divorced or Separated Claimants Schedule, it is possible to calculate total household resources.