Property Taxes Could Be Scrapped For Senior Citizens in Michigan

A new bill introduced in the Michigan Senate could eliminate property taxes for all residents aged 70 and older, in a move that the legislation's sponsor says will prevent retirees from losing their homes in the face of rising costs.

However, a professor at the University of Chicago contacted by Newsweek was skeptical, saying it was effectively shifting the tax burden from wealthy older taxpayers onto younger ones.

Why It Matters

Property taxes have surged across the country over the past few years, as home values skyrocketed during the pandemic housing boom. For retirees on a fixed income and for those already struggling with rising housing costs, property taxes are a significant financial burden.

In many Republican-led states across the U.S., a movement to drastically reduce property taxes or even eliminate them altogether is growing, despite concerns over a loss in revenues for local governments. Four states, including Florida, Illinois, Kansas and Pennsylvania, are currently trying to scrap property taxes completely.

What To Know

The proposed measure—SB 292—was introduced by Republican State Senator Michele Hoitenga of Manton on May 13. The bill seeks to eliminate property taxes for all Michigan homeowners aged 70 or older, whether they are retired or not, by amending the state's General Property Tax Act.

"People across Northern Michigan are feeling the financial burden of high taxes—especially our seniors, many of whom are on a fixed income and have worked their whole lives, only to now face losing their homes due to skyrocketing property tax increases," Hoitenga said.

"This bill is a step in the right direction of cutting back the tax burden Michiganders face and sends the message that Republicans want to make life better for our seniors—not worse," she added.

The bill says that the state would reimburse the local governments for the loss in revenues by annually appropriating money from its general fund. It does not specify a sum or percentage.

"Many jurisdictions offer various forms of property tax relief to seniors. For example, by increasing the homestead exemption or reducing the property's assessed value," Assaf Harpaz, assistant professor at the University of Georgia School of Law, told Newsweek.

"Full exemptions are relatively uncommon. In Alabama, however, residents over the age of 65 are totally exempt from the state portion of property tax, though county taxes may still apply."

Most states provide tax subsidies for seniors, while only a few have exemptions. Other states with property tax exemptions for seniors include New York, Texas, and Massachusetts, which require beneficiaries to be 65 or older. In Washington, seniors can benefit at the age of 61.

Newsweek contacted the office of Hoitenga for comment by email on Thursday.

What Experts Think

A measure like that pushed by Hoitenga in Michigan could benefit retirees who are often on a fixed income, although the Michigan proposal is not limited to retirees only, Harpaz said.

"Property tax bills, which typically rise over time due to higher assessed property values, can be particularly burdensome for those individuals," he explained. "These pressures can be compounded by additional age-related expenses such increased healthcare costs."

But there are also disadvantages when it comes to the loss in revenues for local governments funding crucial public services.

"Property taxes fund vital public services such as education, law enforcement, local government, health, and infrastructure," Harpaz said. "Exempting a large group from property tax liability reduces the tax base, which generally means either increasing the tax burden on remaining taxpayers or cutting public services."

Christopher Berry, professor at the University of Chicago, told Newsweek: "It is very common for states to provide some kind of property tax relief for seniors. However, I am not aware of any other state fully exempting residents over 70 (or any other age) from paying property taxes altogether."

He added: "For seniors, the benefit is to protect them from potential increases in property taxes that might make staying in their home unaffordable. Many seniors are on fixed incomes; when their home values increase, their incomes don't increase to help offset increases in property taxes. In some cases, such increases in property taxes could force a senior to have to sell and move."

Berry, however, is skeptical of the bill introduced by Hoitenga. "Because there is apparently no income limit to qualify for this program, it is a windfall benefit to wealthier seniors who could afford to pay their taxes, at the expense of younger citizens, many of whom struggle to find affordable housing," he said.

"This policy is effectively an intergenerational transfer. The tax burden is shifted from older taxpayers onto younger ones. Moreover, many seniors have already paid off their mortgage and, therefore, face lower housing costs than younger families do."

The bill, if passed, could also "gum up the local housing market by altering household decisions about moving," Berry said.

"For instance, many seniors wish to downsize and move to an apartment when they become empty nesters. Those moves free up housing for younger families. This policy would create incentives for seniors to stay in their homes longer to take advantage of the tax benefits, keeping their homes from filtering down to new owners," he added.

While Berry finds the goal of helping seniors avoid runaway property taxes "laudable," he said he fails to see "any logic" for not including some kind of income limit to qualify for this benefit."

"Either this is an intentional giveaway to seniors or it is a very ill-conceived policy that needs some amendments," he said.

What Happens Next

SB 292 has been referred to the Senate Committee on Finance, Insurance and Consumer Protection for consideration. In order to be implemented, it needs to pass both the Senate and the House, and be signed into law by the state's governor, Democrat Gretchen Whitmer.

If passed, the property tax exemption would apply to seniors' primary residence and would be effective for taxes levied after December 31, 2025. It would affect over a million Michigan residents estimated to be aged 65 and older—a demographic that is expected to grow in the coming years.