Land Value Tax Plan FAQs
The Land Value Tax Plan modernizes Michigan’s outdated, one-size-fits-all municipal tax structure by allowing municipalities like Detroit to replace certain taxes on property improvements (including homes,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.