The Land Value Tax Plan
This educational tool provides an estimate of your tax bill if the Land Value Tax proposal were in effect in 2023. These estimates are based on the current proposal in the Michigan State Legislature, which will also require City Council and voter approval.
Detroit’s Land Value Tax Plan is a way for Detroit voters to decide whether to cut homeowners’ taxes by an average of 17% and pay for it by increasing taxes on abandoned buildings, parking lots, scrapyards, and other similar properties.
If the Michigan Legislature authorizes, Detroit City Council would decide by November, 2023 whether to place the issue on the ballot. Detroit voters would decide whether to adopt the Land Value Tax at the February, 2024 Presidential primary election. Homeowners would see the full tax cut in 2025.
State Representative Stephanie Young from Detroit is the sponsor of the Lansing legislation.
Under Detroit’s property tax system, blight is rewarded and building is punished. Detroit homeowners pay among the highest property taxes in Michigan.
Owners of abandoned buildings, scrapyards, and parking lots pay very little.
Two-Part Land Value Tax Plan
- Cut tax mills on buildings by 14 mills
- More than double taxes on land.
The Land Value Tax Plan modernizes Michigan’s outdated, one-size-fits-all municipal tax structure by allowing municipalities like Detroit to replace certain taxes on property improvements (including homes, buildings and other structures).
The Land Value Tax Plan allows local governments to put money back into the pockets of their residents, reduce blight and tax foreclosures, encourage reinvestment and support small businesses.
- Michigan’s current municipal tax structure is broken and creates an unfair tax burden on homeowners and small businesses in some communities.
- The current system also unfairly rewards land speculators, discourages investment and improvements while saddling homeowners with a growing tax burden.
- As some municipalities have lost residents and vacant lots have increased, the tax burden on property owners has increased, which is why the Land Value Tax Plan is necessary.
- The Land Value Tax Plan is supported by a broad, bipartisan coalition that transcends political and geographic lines.
- The coalition agrees Michigan’s rigid approach to its municipal property tax code is overburdening Detroit’s homeowners and small businesses.
- The coalition includes the City of Detroit, housing affordability advocates, faith leaders, small-business associations and more.
- No. The Land Value Tax Plan can benefit communities throughout Michigan that want to use it to attract new development and investments, revitalize neighborhoods and address blight.
- The Land Value Tax Plan gives communities a CHOICE to modernize their municipal tax structures to reduce tax rates for homeowners and small businesses.
- The Land Value Tax Plan also allows communities to hold land speculators and owners of vacant, unused or unproductive land accountable through imposing a higher tax burden on holding those properties undeveloped.
The average Detroit homeowner will get a 17% permanent property tax cut in 2025. 97% of all Detroit homeowners will get a tax cut.
The legislation guarantees no Detroit homeowner gets a tax increase from the Land Value Tax plan.
Detroit’s millage for operations would be cut by 14 mills, from 20 mills to 6 mills for improvements to all taxable property. That cut applies to apartments, retail stores, office buildings, homes, and land.
The 14 mill cut reduces the homeowner’s property taxes in this way:
|Current Homeowner Tax||Change under Land Value Tax|
|Detroit Operating 20 Mills||Detroit Operating 6 Mills|
|Detroit Debt 7 Mills||Detroit Debt 7 Mills|
|School Operating 6 Mills||School Operating 6 Mills|
|School Debt 13 Mills||School Debt 13 Mills|
|County 17 Mills||County 17 Mills|
|Libraries 4 Mills||Libraries 4 Mills|
|Total 67 Mills||Total 53 Mills|
(County mills include county, parks, ISD, WCCCD, Zoo, DIA)
Today, Detroit homeowners pay among the highest property taxes in Michigan. Under the Land Value Tax, Detroit’s property tax rates will become competitive with neighboring cities like Southfield, Ferndale, Warren, and Grosse Pointe. The attached map illustrates that change.
Land values in Detroit are very low. Large millage increases on land don’t result in large tax burdens. The land mills will be increased by approximately 104 mills.
The average vacant residential lot in Detroit currently pays $30 a lot. The Land Value Tax will increase the taxes to an average of $67 per lot.
Urban farms, community gardens, and community spaces will not be affected by the Land Value Tax. They are deemed community space under the proposal.
No homeowner will get an overall tax increase if they own 4 side lots or less. The average bill on a side lot will go up about $30 a lot, from $25 to approximately $55. The average homeowner will get a tax cut on their house that is much larger than that. If you are the exception where the increase in your side lot tax is more than the tax cut on your home, you will receive a credit. You will have no overall tax increase as a result of the Land Value Tax.
Yes. You can choose whichever option is better for you. If you have an NEZ break, you can keep that break until your 15 year period runs out. When your NEZ period ends, you will automatically receive the permanent Land Value Tax break.
No. NEZ’s have created tax inequity among Detroit neighborhoods. Existing NEZ holders will be grandfathered. But no new NEZ’s will be granted afterward. As the existing NEZ’s phase out, all Detroit neighborhoods will pay the same tax rate.
The tax on the vacant land will more than double. The millage rate on land will increase an estimated 104 mills, going from 85 mills today to approximately 189 mills.
The land tax will more than double, but these owners will get a 14-mill tax cut on any improvements on the property. The effects will vary, but should average about a 50% increase in property taxes.
The total Summer levies add up to 76 mills, which is why the Summer tax bill shows 76 mills at the bottom of the page. However, if you have Principal Residence Exemption, then the 17 mills of School Operating tax will say “EXEMPT”. Subtract these 17 mills from the 76 total to get 59 mills. This is your Summer millage. In Winter, you will pay another 9 mills for a total of 68 mills in 2023. Then in 2024, the total millage will go down to 67 because the City will reduce the debt millage by 1.
The estimate provided is for the sum of your summer and winter taxes and does not include any other fees (such as solid waste fee or penalties). So it won’t match your summer tax bill, but instead the sum of your summer and winter tax bills. Additionally, the estimate is based on the assessment data as of June 30th, 2023, including the taxable value and any abatements or exemptions you may have had at that time. Your tax bill may vary if there have been any adjustments or changes since then, such as change in ownership or approval of a HOPE exemption.
The NEZ Homestead saves homeowners about 20% whereas the LVT saves homeowners 17% on average. Until the NEZ expires, the homeowner will receive whichever is the larger savings. Most homeowners will see a slight increase after the NEZ expires, but will see savings versus if there was no NEZ or LVT. Some homeowners will see an immediate savings under LVT based on the value of land. NEZ Rehabs and NEZ News often see a large tax increase once the abatement expires, but the LVT will result in a smaller increase.
Homeowners with a 100% HOPE exemption or veteran exemption will continue to pay $0 in property taxes. Homeowners with a partial exemption may have a further decrease or no change.
Personal property is not impacted by the proposed LVT plan. Only real property will see a change in the way their tax bills are calculated.
The lookup tool only shows estimated tax bill changes for residential homes. If you are a homeowner with side lot(s), the average increase per side lot is $25-30. Nearly all homeowners with side lots will have net savings due to a larger tax decrease on their home. However, the LVT plan guarantees that no homeowner with four side lots or fewer will see a net increase.
This estimator only shows estimated tax bill changes for residential homes. If you own commercial/ industrial property, personal property, and/or vacant land (such as side lots), the website does not have the capability to calculate your estimated tax bill change. If you just purchased your home from the Detroit Land Bank Authority, recently changed homeowner status, or recently received an exemption or abatement, the change may not be reflected in the data yet, which is current as of June 30, 2023. If you cannot find your address or parcel number you can search for it on Detroit Parcel Viewer.
While an estimated 97% of homeowners would see a decrease in their tax bill under the LVT plan, some homeowners will see no change, particularly if they own parcels with a significant amount of land. If you own your home and see an increase, then you may not have a Principal Residence Exemption on your property and should contact the Office of the Assessor or email [email protected].
Compare Detroit's Neighboring Cities Property Tax Rates
How To Enact a Land Value Tax Plan in Detroit?
The Michigan Legislature can allow for real tax relief for homeowners and small businesses through legislation that allows cities like Detroit the choice to adopt the Land Value Tax Plan.
This legislation would help local governments maintain a stable revenue stream and discourage blight and land speculation. And while the Land Value Tax Plan may not be the right choice for every community, research shows it would be a major boost for Detroit.
The legislation would empower local voters in municipalities to decide whether the Land Value Tax Plan is right for their community.