Michigan Proposal A: taxable value versus state equalized value explained

Last updated 2026-07-10

What is Michigan Proposal A and why does it create two different values?

Michigan voters passed Proposal A in March 1994, amending Article IX, Section 3 of the state constitution. Before that vote, property taxes tracked the assessor's market estimate directly, adjusted every year. When the housing market jumped, tax bills jumped with it. Homeowners hated it.

Proposal A split the world into two numbers. The first is state equalized value (SEV), the assessor's best estimate of 50% of your property's true cash value as of December 31 of the prior year. The second is taxable value (TV), the number your tax bill actually uses. TV starts at SEV when you buy, then grows no faster than the inflation rate multiplier (IRM) tied to the Consumer Price Index, or 5%, whichever is lower. ^[1]

Michigan real estate has outrun CPI most years since 1994, so TV has fallen well behind SEV for people who have owned a while. That gap is real money. A property with a $200,000 SEV and a $120,000 TV pays taxes on $120,000, not $200,000. That $80,000 spread stays yours as long as you keep the house.

The Michigan Department of Treasury publishes the IRM each fall. For 2024 taxes the IRM was 1.05, meaning TV could rise at most 5% because the CPI figure hit the statutory cap. For 2025 the IRM dropped to 1.027, so TV growth was limited to 2.7%. ^[2]

How does the assessor calculate SEV (state equalized value)?

Assessors across Michigan's 83 counties follow guidance from the Michigan State Tax Commission (STC). The official standard is that SEV equals 50% of true cash value, which MCL 211.27 defines as "the usual selling price at the place where the property to which the term is applied is at the time of assessment." ^[3]

In practice, assessors use one of three appraisal approaches: sales comparison (recent arm's-length sales of similar properties), cost (replacement cost minus depreciation), and income (mostly for commercial and rental property). Residential assessors lean hard on sales comparison.

Then comes equalization. Each local unit's assessments get reviewed at the county level, and the State Tax Commission reviews the county totals. The point is to keep any one jurisdiction from systematically over- or under-assessing against real market value. That second round of review is why it's called state equalized value, more than assessed value.

Your notice shows both SEV and TV. A lot of people fixate on SEV because it's printed bigger and sounds more official. Focus on TV. That is the number multiplied by your local millage rates to build your tax bill.

How is taxable value calculated, and what is the inflation rate multiplier?

The formula under MCL 211.27a is simple once you write it out:

New TV = lesser of (prior year TV x IRM) OR (current year SEV)

The Michigan Department of Treasury publishes the IRM. It equals the U.S. Consumer Price Index for All Urban Consumers (CPI-U) measured October to October of the prior year, rounded to three decimals, and it can never top 1.05 (5%). If CPI-U goes negative, the multiplier floors at 1.0, so TV can't fall from the IRM math alone. ^[2]

Here is how that has played out recently:

Tax Year	IRM	Maximum TV Increase
2020	1.024	2.4%
2021	1.014	1.4%
2022	1.033	3.3%
2023	1.05	5.0% (cap hit)
2024	1.05	5.0% (cap hit)
2025	1.027	2.7%

Source: Michigan Department of Treasury, Annual IRM tables ^[2]

The second half of the formula matters just as much. If your SEV drops below TV because market values fell, your TV is automatically pulled down to match SEV. TV can never exceed SEV. That protection cuts both ways.

One more wrinkle: additions and losses (a new room, a demolished shed, a pool you filled in) get added to or subtracted from TV outside the IRM cap in the year they first hit the roll. New construction is assessed at SEV in year one, then the cap kicks in going forward.

What is the uncapping rule, and when does it happen?

This is the part that blindsides buyers. Every time a property changes hands, TV "uncaps" and resets to that year's SEV. The next year, the cap starts over from that reset point.

MCL 211.27a(3) lists the transfers that trigger uncapping. Sales, most gifts, and moving property into a trust or LLC where the original owner keeps no qualifying interest all count. Some transfers don't trigger it: transfers between spouses, certain parent-to-child transfers, transfers into a revocable trust where the original owner is the sole beneficiary, and a handful of others. ^[3]

The dollar hit can be brutal. Say a longtime owner has a TV of $90,000 and an SEV of $180,000. At 40 mills, their annual bill is $3,600 ($90,000 x 0.040). A buyer resets TV to $180,000 on the next roll, and the bill becomes $7,200 at the same millage. Double, overnight. This isn't an error. It's the law working exactly as written.

Bought recently and your tax bill jumped compared to the seller's? Uncapping is almost always why. No appeal undoes it. You can only appeal if the resulting SEV runs above 50% of true market value.

How do SEV and TV appear on your Michigan assessment notice?

Every Michigan assessor mails a Notice of Assessment, Taxable Valuation and Property Classification (Form L-4400) by May 1 each year, usually arriving in late February or early March. ^[4] The notice shows:

• Prior year SEV and TV
• Current year SEV and TV
• The percentage change in each
• Your property class and classification
• The deadline to file a protest with the local Board of Review

The notice is not your tax bill. It just tells you what the assessor thinks. Your actual bill, calculated by multiplying TV by your millage rate and subtracting credits, comes later, usually mailed by the local treasurer in July for summer taxes and December for winter taxes.

Read both numbers, but ask each a different question. For SEV: is 50% of this number roughly what the house would sell for right now? If the SEV implies a full market value higher than real comparable sales, that's appealable. For TV: did it rise by more than the IRM allows? Math errors happen. Multiply last year's TV by the published IRM and see if you land on this year's TV, assuming no additions or transfers.

Can you appeal taxable value, or only state equalized value?

You can appeal both, but for different reasons and with different arguments.

Appealing SEV is the common route. You argue the assessor overshot your property's true cash value. The standard is that SEV should equal 50% of true cash value, so if recent comparable sales say your house is worth $280,000, your SEV should be no more than $140,000. If the notice shows $175,000, you have a real case. ^[5]

Appealing TV directly is rarer. The main grounds are a math error in applying the IRM, an improperly uncapped transfer (you transferred to your spouse or child and it should have been exempt), or an addition or loss figured wrong. TV up by more than the IRM in a year with no additions and no ownership change? Worth questioning.

You file with the local Board of Review in March. Each township and city holds its sessions the week containing the second Monday of March. You must appear or submit a written protest by the deadline on your notice. Miss the March Board of Review and your appeal is usually dead. For residential property, you generally can't reach the Michigan Tax Tribunal without protesting at the Board of Review first. ^[6]

If you want to build a clean appeal with your own comps instead of handing a firm 30% to 50% of your savings, a structured DIY approach works fine for Michigan residential cases. The TaxFightBack appeal kit walks you through pulling your own sales data and formatting your Board of Review submission.

Homeowners in other high-assessment states face similar research and different mechanics. The Cook County tax assessor tax bill guide covers how Illinois handles its own equalization factor, which creates a similar two-number confusion.

What is the Michigan Tax Tribunal and when do you go there?

The Michigan Tax Tribunal (MTT) is a state administrative court that hears property tax appeals after the Board of Review. For residential property, you protest at the March Board of Review first. If you lose or get a weak result, you can file a Small Claims Division petition with the MTT. ^[6]

Small Claims covers residential property with an SEV of $1.5 million or less (check the current threshold at the MTT website). The filing fee is $25 for the first parcel. You handle it yourself; lawyers are allowed but not required. The residential filing deadline is July 31 of the tax year, but the legislature has moved it before, so confirm the exact current date with the MTT. ^[10]

The Regular Division handles commercial and higher-value property. Lawyers are common there, and the process is more formal, with discovery and expert testimony.

At the MTT you still argue SEV, not TV directly, unless you have a specific TV calculation error. If the Tribunal cuts your SEV, your TV follows, because TV can never exceed SEV. That's the indirect payoff: winning an SEV appeal lowers the ceiling on TV and can cut your current taxes too if TV already sits at or near SEV.

For how another state runs its version of the MTT, see the montgomery county property tax guide, which walks through Maryland's appeal ladder.

What is the principal residence exemption and how does it interact with TV?

The Principal Residence Exemption (PRE), still called the Homestead Exemption by some, is a separate benefit under MCL 211.7cc. It exempts your primary residence from up to 18 mills of school operating taxes. ^[7] It does not touch your SEV or TV. It reduces the effective millage rate applied to your TV.

File the PRE affidavit (Form 2368) with your local assessor by June 1 to get the exemption for that tax year. Miss June 1 and you wait until the next year. There is a late-filing process, but it isn't guaranteed. ^[9]

The PRE and the TV cap both protect the same group, homeowners in their primary residence, yet they run independently. You can have a low TV relative to SEV from years of capped growth and still lose the millage savings if you never filed the PRE, or if you rent the place out.

When you sell, the buyer must re-file the PRE in their own name. It does not carry over, and TV uncapping happens regardless of whether the PRE was on file.

Does a lower SEV automatically lower your tax bill?

Not always. This is one of the more backwards-feeling parts of Michigan property tax.

If your TV already sits well below your SEV from years of capped growth, cutting SEV may do nothing for your taxes right now. TV is the binding number. An SEV reduction only trims your current bill when TV equals or nearly equals SEV, which usually happens the year after you buy.

So why appeal SEV at all if TV is the lower number? Two reasons. SEV is the ceiling on TV, so a lower SEV means a lower ceiling as TV catches up over time. And if you're a newer owner with TV close to SEV, a winning SEV appeal cuts your taxes immediately and resets the base your future TV growth caps from.

For owners sitting on a big SEV-to-TV gap, the practical move is this: check both numbers every year, but spend your appeal energy on SEV only when TV is within striking distance, or when you have hard evidence the market value the assessor used is inflated against actual comparable sales.

What evidence wins a Michigan Board of Review appeal?

The Board of Review is three elected or appointed members from your local unit of government. They aren't professional appraisers, and your hearing might run 10 to 15 minutes. Simple, concrete evidence wins.

The strongest evidence is recent arm's-length sales of comparable properties. Pull 3 to 5 sales from the past 12 months (closer is better) of houses similar in size, age, condition, and location. MLS records, Zillow sale data, and your county's online property lookup all work. The key math: take each sale price, divide by two, and compare to your SEV. If the median of your comps implies a full value below what the assessor used, say so plainly.

A licensed appraisal is the gold standard, but it costs $350 to $600 and is probably overkill for a Board of Review where the savings might be $400 a year. Save the appraisal money for the Michigan Tax Tribunal if you escalate.

Other useful evidence: a recent purchase price (if you bought in the past 12 to 18 months and paid less than the assessed full value implies), permits or inspection reports showing deferred maintenance or structural problems the assessor missed, and a written list of condition differences between your house and the comps.

Do not walk in and say "my taxes are too high." That is not a legal argument. You need to argue that SEV exceeds 50% of true cash value, or that TV was miscalculated. Those are the two paths.

For a ready-made framework to organize your comps and write your protest letter, the TaxFightBack appeal kit is built for this kind of DIY Board of Review submission. You keep 100% of any reduction, versus the 30% to 40% contingency fee most commercial firms charge.

How does Michigan's system compare to states like California and Illinois?

Michigan is not alone in capping assessed value growth, but the mechanics change from state to state.

California's Proposition 13 (1978) caps assessed value increases at 2% a year, lower than Michigan's 5% IRM ceiling. California also resets to full market value on sale, just like Michigan's uncapping rule. The difference: California's 2% cap is a fixed constitutional limit, not tied to CPI. ^[8]

Illinois runs a different setup. Cook County has no statewide TV-versus-SEV split. Assessed value is supposed to be 10% of market value for residential property (yes, 10%, not 50%), with a state equalization factor layered on top. The confusion for Illinois owners centers on that equalization factor, not a TV cap. The cook county tax assessor tax bill guide has the details.

Florida's Save Our Homes amendment (1992) caps homestead assessment increases at 3% or CPI, whichever is lower, and the homestead exemption adds more protection on top. Minnesota, home of the hennepin county property tax process, has no equivalent cap. Assessed values move freely with the market, which is one reason Minnesota appeals focus more directly on market value.

Cap states share one trap: buyers inherit the seller's low assessed base for a moment, then hit a sharp reset. In every one of these jurisdictions, understanding the reset rule before you buy matters at least as much as understanding the cap.

Frequently asked questions

What is the difference between taxable value and state equalized value in Michigan?

State equalized value (SEV) is the assessor's estimate of 50% of your property's market value, recalculated every year. Taxable value (TV) is capped at the lesser of 5% or the CPI inflation rate multiplier each year. Your tax bill uses TV. For longtime owners TV is often far below SEV, which lowers taxes. The gap disappears when you sell.

Does taxable value reset when you buy a house in Michigan?

Yes. Under MCL 211.27a, TV uncaps and resets to that year's SEV on the assessment roll following any transfer of ownership. From that point, the annual IRM cap starts over. Buyers of properties with a large SEV-TV gap should expect a much higher tax bill than the prior owner paid. This is sometimes called the "pop-up" tax.

Can taxable value ever go down in Michigan?

Yes, in two situations. First, if SEV falls below TV (market values dropped), TV automatically drops to match SEV. Second, if a physical loss occurs, such as a demolished structure, the loss is deducted from TV. The IRM cap floors at 1.0, so TV can't decrease just because CPI turns negative. Successful appeals that lower SEV will also lower TV if TV was at or above the new SEV.

How do I calculate my own taxable value increase?

Multiply last year's TV by the IRM for the current tax year (published by the Michigan Department of Treasury each fall). Then compare that result to your current SEV. TV becomes the lower of those two numbers. If your notice shows a TV higher than (prior TV x IRM), and you had no new construction or ownership change, contact your assessor right away about a possible calculation error.

What is the IRM for 2025 Michigan property taxes?

The Michigan Department of Treasury set the 2025 IRM at 1.027, meaning taxable value could increase a maximum of 2.7% for the 2025 tax year. That was down from 1.05 (the 5% statutory cap) in both 2023 and 2024. The IRM is based on the October-to-October change in the U.S. CPI-U, capped at 1.05 per the Michigan Constitution.

When is the deadline to appeal my Michigan property tax assessment?

You must file a protest with your local Board of Review during its March session, typically the week containing the second Monday of March. Your assessment notice shows the specific dates. Missing this window generally bars you from appealing to the Michigan Tax Tribunal for residential property. Commercial and industrial properties have a separate May Board of Review session.

Does the principal residence exemption reduce taxable value?

No. The Principal Residence Exemption (PRE) reduces the millage rate applied to your taxable value, specifically exempting up to 18 mills of school operating taxes. It does not change your SEV or TV. File Form 2368 with your local assessor by June 1 to receive the exemption for that tax year. You must own and occupy the property as your primary residence to qualify.

Can I appeal my taxable value if my SEV went down but TV stayed the same?

If SEV dropped below TV, TV should have automatically been reduced to match SEV; MCL 211.27a requires it. If your notice shows TV above the new, lower SEV, that is a calculation error, so contact the assessor immediately or raise it at the March Board of Review. If TV is simply unchanged because it was already below the new SEV, no appeal is needed.

Is it worth appealing SEV if my taxable value is much lower?

Probably not for immediate savings. If TV is well below SEV, your bill runs off TV, and a lower SEV does nothing right now. The value of an SEV appeal for longtime owners is long term: it lowers the ceiling TV will eventually reach. Appeal SEV when it is inflated and TV sits close to it, or when you recently bought and TV reset to a high SEV.

What transfers do not trigger taxable value uncapping in Michigan?

MCL 211.27a(3) exempts several transfers: between spouses, to a child or sibling that qualify under the statute, into a wholly owned revocable trust where the owner keeps beneficial interest, certain corporate restructurings without a change in beneficial ownership, and a few others. Get the full list from the Michigan State Tax Commission before assuming a transfer is exempt.

How does Michigan's taxable value cap compare to California's Proposition 13?

Both cap annual assessment growth for existing owners and reset to market value on sale. California's Proposition 13 caps increases at 2% per year regardless of inflation. Michigan's cap is the lesser of the CPI inflation rate or 5%, so in low-inflation years Michigan's cap is smaller, and in high-inflation years the 5% ceiling kicks in. California's 2% hard limit is generally more protective over long holding periods.

Where do I find my property's SEV and taxable value?

Your annual Notice of Assessment (Form L-4400), mailed by May 1 each year, shows both values. Most Michigan county assessors also run property lookup portals where you can search by parcel number or address. The Michigan State Tax Commission and your local township or city assessor's office can provide historical data if you need to trace past TV calculations.

Sources

1. Michigan Constitution, Article IX, Section 3 (as amended by Proposal A, 1994): Proposal A amended the Michigan Constitution in 1994 to cap taxable value increases at the lesser of 5% or CPI inflation annually.
2. Michigan Department of Treasury, Inflation Rate Multiplier tables: The 2025 IRM is 1.027; the 2023 and 2024 IRM hit the 5% statutory cap at 1.05.
3. Michigan Compiled Laws, MCL 211.27 and MCL 211.27a: MCL 211.27 defines true cash value as the usual selling price; MCL 211.27a governs the TV cap formula and lists transfers that do and do not trigger uncapping.
4. Michigan State Tax Commission, Assessment Administration Guide: Michigan assessors must mail the Notice of Assessment (Form L-4400) by May 1 each year, showing both SEV and TV.
5. Michigan State Tax Commission, Property Assessment Fact Sheet: SEV is required by law to equal 50% of true cash value, and taxpayers may appeal if SEV exceeds that standard.
6. Michigan Tax Tribunal, Small Claims Division information: Residential property owners must protest at the March Board of Review before filing at the Michigan Tax Tribunal; Small Claims Division covers residential property with SEV of $1.5 million or less.
7. Michigan Compiled Laws, MCL 211.7cc, Principal Residence Exemption: The Principal Residence Exemption exempts qualifying homesteads from up to 18 mills of school operating taxes; Form 2368 must be filed by June 1.
8. California State Board of Equalization, Proposition 13 overview: California Proposition 13 caps annual assessed value increases at 2% and resets to full market value on change of ownership.
9. Michigan Department of Treasury, Principal Residence Exemption FAQ: The PRE reduces the millage rate applied to taxable value; it does not change SEV or TV.
10. Michigan Tax Tribunal, Filing fees and petition information: The Small Claims Division filing fee is $25 for the first parcel; the July 31 deadline applies to most residential appeals.