Michigan: Manufacturing-related property tax exemption; available beginning 2016

Michigan: Manufacturing-related property tax exemption

Taxpayers in Michigan may claim, beginning 2016, a property tax exemption for “eligible manufacturing personal property.”

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The property tax exemption was enacted in 2012, but subject to voter approval. In 2014, Michigan voters approved the exemption, and thus “activated” the previously enacted exemption for eligible manufacturing personal property (EMPP) effective January 1, 2016. 

The exemption for EMPP is actually two exemptions: 

  • One for “qualified new personal property” 
  • The other for “qualified previously existing personal property”—defined as EMPP that is “new personal property” which, in turn is defined as property that was initially placed in service inside or outside Michigan after December 31, 2012, or that was construction-in-progress on or after December 31, 2012, that had not been placed in service within or without Michigan before 2013

All qualified new personal property initially placed in service after 2012 is exempt from property tax beginning in 2016.

Property that meets the definition of “qualified previously existing personal property” is not exempt immediately, but is instead subject to a phased-in exemption. “Qualified previously existing personal property” means personal property that meets both of the following conditions: (1) is EMPP; and (2) was first placed in service inside or outside Michigan more than 10 years before the current calendar year. So, property placed in service before 2006 will become qualified previously existing personal property, and therefore exempt, in 2016. 

Property placed in service in 2006 will become exempt qualified previously existing personal property in 2017. All qualified previously existing personal property will be exempt by 2023.

To claim the EMPP exemption, taxpayers must file a Form 5278, Affidavit and Statement for Eligible Manufacturing Personal Property and Essential Services Assessment, no later than February 20, 2016. The form must be filed for each personal property parcel for which the exemption is being claimed.


Read a November 2015 report [PDF 55 KB] prepared by KPMG LLP: Michigan: New Industrial Personal Property Tax Exemption Effective January 1, 2016

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