Consumer Price Index (CPI)

• Each year, Michigan's Treasury Tax Analysis Division is required to use data from the U.S. Bureau of Labor Statistics to calculate the inflation rate multiplier. The inflation rate multiplier is a ratio calculated by dividing the 12-month average U.S. consumer price indexes (CPI) for Michigan's fiscal year directly prior to the property tax year by the 12-month average U.S. consumer price indexes (CPI) for Michigan's fiscal year prior to the fiscal year directly prior to the property tax year. For example, this means the ratio for Michigan in 2010 is estimated by the U.S. CPI average of 2009 divided by the U.S. CPI average of 2008.
  
  

Using CPI in the Equation

• These equations, as explained on midland-mi.org, are used to determine property tax---"taxable value of property"---in Michigan: (Last year's taxable value) - (Losses) + (5%) + (additions), or (Last year's taxable value) - (Losses) + (the Inflation Rate Multiplier) + (additions).
  Notice that either 5 percent or the inflation rate multiplier---whichever value is less---will be used in the equation. Also, remember that a consumer price index value (CPI) can replace the "Inflation Rate Multiplier" in the second equation.
  
  

Estimating Taxes Using Mills

• The property tax rate in Michigan is called a millage, and its value is in "mills." The Michigan city of Midland's Fiscal Services Department states that one mill is equivalent to one one-thousandth of a dollar. Therefore, property tax is $1 for every $1,000 in a property's taxable value. For example, if a city's millage rate is 10, property taxes on a home with a taxable value of $125,000 would be $1,250. The calculation is 10/1,000 x $125,000= $1,250.
  The state of Michigan also assesses an administrative fee that is 1 percent of the property tax value that has to be paid. This additional fee enables the state to "determine and defend annual assessments." Concerning the example above, 1 percent of the taxable value of $1,250 is $12.50.
  
  

State of Michigan Online Property Tax Estimator

• You may calculate your property taxes for the state of Michigan online at treas-secure.state.mi.us. When using the online property tax estimator, you must enter the state equalized value (SEV) of the property. Even though the SEV fluctuates from one year to the next, the SEV of property is equivalent to one half of its market value. The site explains that this value is for "future owners" and that you should enter the taxable value if you are a current owner. Then select your county from the drop-down list. Finally, select your city, village or township and school district.
  
  

Considerations in Estimations

• According to treas-secure.state.mi.us, the millage rate for industrial personal property (for some areas) may be six mills less than an estimated primary residence millage rate. Also, the millage rate for commercial personal property (in some areas) may be the lesser of the business rate or six mills more than an estimated primary residence millage rate. In a few county/school district combinations, community college millage is levied on some properties and not others. If colleges are not in the area, "none" is entered in the state database, and if there is more than one college in an area, the state database uses only one community college rate.
  
  

Considerations

• In comparing the taxable value of property to the SEV, the taxable value is either equal to or less than the SEV, and it can never be higher than the SEV.
  A person who owns a home and occupies it as a primary residence may qualify for a homestead or principle residence exemption. Based on russravary.com, a person may claim an exemption on "mills levied by local school districts for operating purposes."
  After buying a home, you can negotiate with the assessor or tax board to lower the SEV.