Disabled Veteran Property Tax Exemption
Michigan Disabled Veteran Property Tax Exemptions in 2026
Michigan Treasury, Disabled Veterans Exemption
MI, MCL
Veterans Affairs, Disability Compensation
Michigan fully exempts 100% permanently disabled Veterans from all property taxes on their primary residence, no cap on home value, no income test, and starting in 2026, no annual renewal required. At Michigan’s average effective rate of 1.38%, a $225,000 home saves $3,105 per year, $259 per month. TDIU and specially adapted housing recipients also qualify. Combined with the VA funding fee waiver and Michigan’s affordable housing markets, the total first-year benefit on a typical purchase can exceed $8,000.
100% P&T Full Exemption
- Complete property tax elimination on your primary residence, no dollar cap on home value whatsoever
- Qualifies: 100% P&T disabled, TDIU (individually unemployable), or specially adapted housing recipients
- Starting 2026, approved exemptions remain in place automatically, no more annual renewal applications
- File Form 5107 with your local assessor immediately after closing on your home
No Partial Exemptions
- Michigan does not offer property tax reduction for Veterans with disability ratings below 100% P&T
- Veterans below 100% may qualify for Michigan’s Homestead Property Tax Credit through the state income tax
- The credit is income-based and applies to property taxes exceeding 3.2% of household income
- Check Form MI-1040CR for the Homestead Property Tax Credit if you are below 100%
Filing And Deadlines
- File Form 5107 (Affidavit for Disabled Veterans Exemption) with your local city or township assessor
- Applications accepted January 1 through December 31 of the year you are requesting the exemption
- Bring VA disability letter, DD-214, and proof of homestead occupancy to the assessor’s office
- File as soon as possible after closing, earlier filing means earlier escrow adjustment
VA Loan Impact
- Eliminating $2,500 to $4,000+ in annual property taxes reduces your monthly PITI by $208 to $333
- At Michigan’s 1.38% average rate, the exemption adds roughly $33,000 in VA loan buying power at 6.5%
- Stack with the VA funding fee waiver for combined first-year savings exceeding $8,000 on most purchases
- Tell your VA lender about the exemption during preapproval for accurate escrow calculation
Frequently Asked Questions
How much does a 100% disabled Veteran save on property tax in Michigan?
The full exemption eliminates all property taxes on your primary residence. At Michigan’s average effective rate of 1.38%, a $225,000 home saves $3,105 per year, $259 per month. In higher-rate counties like Wayne or Washtenaw, savings can exceed $4,000 annually.
Does Michigan still require annual renewal for the property tax exemption?
No, starting in 2026, approved exemptions automatically remain in place until the property owner rescinds them or the assessor denies them. Veterans no longer need to file annual renewal paperwork.
Does TDIU qualify for the Michigan exemption?
Yes. Michigan specifically includes Veterans rated as individually unemployable by the VA. You qualify for the full exemption with the same documentation, your VA letter confirming IU status.
The Bottom Line Up Front
Michigan provides a full property tax exemption for Veterans rated 100% permanently and totally disabled, Veterans receiving TDIU, and Veterans receiving specially adapted housing assistance. The exemption eliminates all property taxes on your primary homestead with no cap on home value and no income test. Starting in 2026, a significant improvement: approved exemptions automatically renew each year without requiring paperwork, eliminating the annual filing burden that many Veterans missed. At Michigan’s average effective rate of 1.38%, a $225,000 home saves $3,105 per year, $259 per month.
Michigan’s affordable housing markets near Military installations make the exemption particularly valuable on a percentage basis. A $200,000 home near Selfridge Air National Guard Base or Camp Grayling saves $2,760/year in property taxes, a meaningful reduction that changes your monthly payment, qualification profile, and long-term housing cost. The exemption is filed through your local city or township assessor using Form 5107.
What To Do Based On Your Situation
- Buying a home in Michigan soon: File Form 5107 with your local assessor immediately after closing. Factor zero property taxes into your target payment and tell your loan officer about the exemption during preapproval.
- Already own a home in Michigan: If you have not applied, file now. If you previously had the exemption, the 2026 auto-renewal change means you no longer need to file annually, but confirm with your assessor that your records are current.
- Surviving spouse of a Michigan Veteran: The unremarried surviving spouse of a qualifying Veteran retains the full exemption. Contact your local assessor with the Veteran’s death certificate and VA documentation.
What Does Michigan Offer Disabled Veterans?
Michigan’s disabled Veteran property tax exemption under MCL §211.7b provides a complete exemption from all property taxes, not a reduction, not a credit, but a full elimination of the tax bill on your homestead. The qualifying categories are broader than many states.
Three categories of Veterans qualify: those rated 100% permanently and totally disabled by the VA, those receiving total disability compensation based on individual unemployability (TDIU), and those receiving or who have received specially adapted housing assistance from the VA. The property must be owned and used as a homestead by the Veteran or their unremarried surviving spouse.
The 2026 auto-renewal change is significant. Previously, Michigan required annual renewal, and many Veterans missed the deadline, losing the exemption for a full year. Starting in 2026, once approved, the exemption stays in place automatically until the Veteran moves, sells, or the assessor has reason to revoke it. This eliminates one of the most common reasons Veterans lost the benefit.
What Is The Exemption Worth In Real Dollars?
Michigan’s effective property tax rate averages 1.38% statewide, which is above the national average. Rates vary by county, city, and school district, urban areas tend to run higher than rural ones.
| Home value | Effective tax rate | Annual tax without exemption | Annual tax with exemption | Monthly savings |
|---|---|---|---|---|
| $175,000 | 1.38% (state avg) | $2,415 | $0 | $201 |
| $225,000 | 1.38% | $3,105 | $0 | $259 |
| $300,000 | 1.50% (suburban) | $4,500 | $0 | $375 |
| $400,000 | 1.70% (Washtenaw Co.) | $6,800 | $0 | $567 |
Macomb County (Selfridge ANGB) ~1.45%: A $225,000 home at the Macomb County rate carries $3,263/year, $272/month. With the full exemption, the entire amount is eliminated. Near Camp Grayling in Crawford County (~1.20%), a $175,000 home saves $2,100/year.
Home Search Impact: Eliminating $259 to $567 per month in property taxes at a 6.5% mortgage rate translates to $32,500 to $71,200 in additional purchase price capacity. In Michigan’s affordable markets, that can move a Veteran from a basic starter home into a fully updated property in a better school district, with the same monthly payment.
What Are The Eligibility Requirements?
Michigan’s eligibility criteria are clear and include three qualifying categories, broader than most states that require only 100% schedular ratings.
| Qualifying category | VA designation required | Exemption |
|---|---|---|
| 100% P&T disabled | Permanently and totally disabled at 100% rate | Full, $0 property tax |
| TDIU | Individually unemployable at 100% compensation rate | Full, $0 property tax |
| Specially adapted housing | Receiving or received SAH assistance from VA | Full, $0 property tax |
| Below 100% (no SAH) | Any rating below 100% without SAH | Not eligible for this exemption |
- Discharge: Honorable discharge required.
- Residency: Must own and occupy as primary homestead.
- No income limit: Michigan’s disabled Veteran exemption has no income cap.
- Auto-renewal (2026+): Once approved, no annual reapplication required.
Approval Watchpoint: Michigan specifically names TDIU as a qualifying category, you do not need a 100% schedular rating. If your VA letter confirms individual unemployability at the 100% compensation rate, you qualify for the full exemption. Many Veterans with TDIU do not realize they are eligible in Michigan because other states require 100% schedular. Bring your VA letter showing TDIU status to your local assessor.
How Do You Apply For The Michigan Exemption?
File with your local city or township assessor, not the county, not the state treasury, and not the VA. Michigan’s property tax system operates at the local government level.
- Obtain Form 5107: Download the Affidavit for Disabled Veterans Exemption from the Michigan Department of Treasury website or pick it up from your local assessor’s office.
- Gather documentation: VA disability letter confirming 100% P&T, TDIU, or SAH status. DD-214 or equivalent discharge documentation. Proof of homestead occupancy (Michigan driver’s license or ID matching the property address).
- File with your local assessor: Submit Form 5107 and supporting documents to the assessor for the city or township where your property is located. Applications are accepted January 1 through December 31.
- Confirmation: The assessor reviews and approves the exemption. Starting in 2026, the exemption automatically renews each year, no more annual paperwork.
- Escrow adjustment: After approval, contact your mortgage servicer to request an escrow reanalysis. Your monthly payment will decrease once the exemption is reflected on your tax bill.
Where Do Veterans Actually File In Michigan?
File with your local city or township assessor. Michigan has 83 counties, but property tax exemptions are administered at the city/township level within each county.
| Military installation / area | County | Approx. effective rate | Annual savings on $225K home |
|---|---|---|---|
| Selfridge ANGB | Macomb | 1.45% | $3,263 |
| Camp Grayling | Crawford | 1.20% | $2,700 |
| Fort Custer (Battle Creek) | Calhoun | 1.55% | $3,488 |
| Detroit Arsenal (Warren) | Macomb | 1.45% | $3,263 |
| Ann Arbor VA Medical Center | Washtenaw | 1.70% | $3,825 |
Process Watchpoint: Michigan’s filing window is the full calendar year (January 1 – December 31), which is more flexible than most states. However, the earlier you file, the sooner the exemption appears on your tax bill and the sooner you can get your escrow adjusted. If you close in March and file in April, you may see the exemption on your July tax bill. If you wait until November, the exemption may not appear until the following year’s assessment.
Do Surviving Spouses Keep The Exemption In Michigan?
Yes. Michigan extends the full property tax exemption to the unremarried surviving spouse of a qualifying disabled Veteran. The surviving spouse must continue to own and occupy the property as their homestead.
If the surviving spouse moves to a different Michigan home, they must file a new Form 5107 at the new location. Remarriage terminates the exemption permanently. The surviving spouse files with the local assessor using the Veteran’s death certificate, VA documentation, and proof of continued occupancy.
How Does This Change Your VA Loan Math?
Michigan’s exemption provides meaningful monthly savings that directly improve VA loan qualification, especially in the state’s affordable housing markets where home prices are well below the national average.
- PITI impact: On a $225,000 home at Michigan’s average 1.38% rate, removing all property tax drops your total PITI from approximately $1,940 to $1,681, a $259/month reduction representing a 13% decrease in your housing payment.
- DTI improvement: At $5,000/month gross income, that $259 reduction drops your housing DTI from 38.8% to 33.6%, moving a tight file well below the 41% VA benchmark.
- Buying power shift: The $259 monthly savings at 6.5% supports approximately $32,500 in additional purchase price. In Michigan’s affordable markets, that often means upgrading from a 2-bedroom to a 3-bedroom or moving into a better neighborhood.
- Escrow adjustment: If you close before the exemption is approved, your lender will escrow at the full tax rate. File Form 5107 immediately after closing, then request an escrow reanalysis once the exemption is confirmed.
Deal Math: A 100% P&T Veteran buying a $225,000 home near Selfridge ANGB at 6.5% with the full exemption pays approximately $1,681/month (P&I + insurance + $0 taxes) versus $1,953/month without. That $272/month over 30 years saves $97,920. Add the VA funding fee waiver ($4,838 on a $225,000 loan at 2.15%) and the combined benefit exceeds $102,700. Michigan’s affordable prices mean the exemption covers a larger share of your total housing cost than in expensive coastal states.
The Bottom Line
Michigan’s full property tax exemption for 100% disabled Veterans, TDIU recipients, and SAH beneficiaries eliminates your entire property tax bill with no cap and no income test. The 2026 auto-renewal change removes the annual paperwork burden that caused many Veterans to lose the benefit. At Michigan’s 1.38% average rate, savings run $2,400 to $4,500+ per year depending on home value and county. File Form 5107 with your local city or township assessor and coordinate with your VA lender for accurate escrow calculation from day one.
Frequently Asked Questions
Should I apply before or after closing on my VA loan?
After closing. You must own and occupy the property as your homestead before filing. Apply immediately after closing, Michigan accepts applications January 1 through December 31, so there is no narrow window to worry about.
Will my lender adjust my escrow after the exemption is approved?
Not automatically. Once the exemption appears on your property tax bill, request an escrow reanalysis from your mortgage servicer. Your monthly payment will decrease and the lender will refund any overage.
Does the exemption affect my VA loan qualification?
Yes. Eliminating $2,400 to $4,500 in annual property taxes reduces your PITI by $200 to $375 per month, improving your DTI ratio by 3 to 6 percentage points depending on your income level.
Can I combine the exemption with the VA funding fee waiver?
Yes. The property tax exemption is a Michigan state benefit. The VA funding fee waiver is federal. They stack, combined first-year savings on a $225,000 home can exceed $8,000.
Does TDIU qualify in Michigan?
Yes. Michigan specifically includes Veterans rated individually unemployable at the 100% compensation rate. You do not need a 100% schedular rating to qualify.
Do I still need to file annual renewal paperwork?
No, starting in 2026, approved exemptions automatically remain in place each year. You no longer need to file annual renewal forms. The exemption continues until you move, sell, or the assessor revokes it.
What if I move to a different home in Michigan?
You must file a new Form 5107 with the assessor in the new city or township. The exemption applies to your current homestead, it does not transfer automatically when you move.
Do partially disabled Veterans get any Michigan property tax relief?
Not through the disabled Veteran exemption under MCL §211.7b. However, Michigan offers a Homestead Property Tax Credit (Form MI-1040CR) through the state income tax for residents whose property taxes exceed 3.2% of household income, Veterans at any rating may qualify.
Does the exemption cover all property taxes?
Yes. The exemption covers all property taxes on your homestead, county, city/township, school district, and special district levies are all eliminated.
What form do I file?
Form 5107, Affidavit for Disabled Veterans Exemption. File with your local city or township assessor. Attach your VA disability letter and DD-214.
Does my surviving spouse keep the exemption?
Yes, if the surviving spouse does not remarry and continues to own and occupy the homestead. The surviving spouse files with the local assessor using the Veteran’s death certificate and VA documentation.
Is there a way to estimate total VA loan cost savings in Michigan?
Combine the annual property tax savings (home value times your county’s effective rate), the VA funding fee waiver (2.15% of loan amount on first use), and Michigan’s state income tax exemption for Military retirement pay. For a $225,000 home near Selfridge, the first-year combined benefit exceeds $8,000.
Resources Used
- Michigan Department of Treasury, Disabled Veterans Exemption
- MI, MCL
- City of East Lansing, Veteran’s Property Tax Exemption
- SmartAsset, Michigan Property Tax Rates by County
- Veterans Affairs, Disability Compensation