If the VA has determined you permanently and totally disabled at the 100% rate, rated you individually unemployable, or helped you adapt your home, Michigan exempts the homestead of a qualifying disabled veteran from property tax entirely. Not a discount, not a credit against income — a full exemption, with no income limit and no cap on what the home is worth. It is one of the most valuable benefits available to Michigan veterans and one of the least explained, so here is the whole thing in plain English: who qualifies, how you claim it, and what changed so that veterans stop losing it over a missed deadline.
Eligibility is determined by your local assessor from your VA documentation. Not every veteran with a service-connected disability qualifies — the three categories are below.
Michigan law exempts the homestead of a qualifying disabled veteran from the collection of property taxes. Understanding the shape of it matters, because it behaves differently from almost every other tax break you have run into.
The governing statute is MCL 211.7b. It provides that real property used and owned as a homestead by a qualifying disabled veteran who is a Michigan resident is exempt from the collection of taxes under Michigan's General Property Tax Act. The word doing the work in that sentence is exempt. This is not a percentage reduction, not a deferral, and not a credit you claim later on an income tax return and wait to receive. If the exemption is granted, the property tax obligation on your principal residence goes away.
Two limits that exist in most tax programs are absent here, and both are worth stating plainly because veterans regularly assume otherwise and never file. There is no income limit. What you earn, what you receive in benefits, and whether you work at all have no bearing on eligibility. There is no cap on the value of the home. The exemption is not limited to the first however-many-thousand dollars of taxable value the way many states structure theirs.
What the exemption does require is that the property be your homestead — the principal residence you own and occupy in Michigan. It does not extend to a second home, a cottage, a rental you own, or land you are holding. One home, the one you live in.
This is where most veterans count themselves out incorrectly. The statute lists three separate qualifying categories, and meeting any single one of them is enough. You do not need all three, and the second and third catch a lot of people who assume the benefit is only for a 100% schedular rating.
The U.S. Department of Veterans Affairs has determined you are permanently and totally disabled as a result of military service and entitled to veterans' benefits at the 100% rate. This is the category most people know about, and that second clause is part of the statutory test — a service-connected rating on its own is not enough.
You have received pecuniary assistance from the VA for specially adapted housing — the SAH or SHA grant programs. If the VA helped you pay to adapt or acquire a home for a service-connected disability, this category applies to you.
The VA has rated you individually unemployable, often called TDIU. This is the one that surprises people. A veteran rated at less than 100% who receives compensation at the 100% rate through TDIU qualifies for the Michigan exemption.
Across all three categories the veteran must have been separated from service under honorable conditions and must be a Michigan resident, and the property has to be the homestead they own and occupy. If you are reading the list and genuinely cannot tell which category you fall into, that is normal — your VA award letter usually says, and your local assessor or a county veteran service officer can read it with you.
If you are the surviving spouse of a veteran who qualified, this benefit did not necessarily end when they died.
Michigan continues the exemption for the un-remarried surviving spouse of a disabled veteran who, immediately before death, was eligible for the exemption — whether or not it had actually been claimed. The spouse files in their own name, must be a Michigan resident, and must hold title in their own name alone rather than jointly. The benefit continues for as long as they remain un-remarried and the home remains their homestead. It can also apply to a homestead the surviving spouse acquires after the veteran's death rather than only to the house they shared, which matters for anyone who downsized or moved closer to family after a loss.
I mention this one first among the details because it is the provision I most often find has been missed entirely — sometimes for years. If you are a surviving spouse in Michigan and nobody has ever walked you through this, it is worth a call to your local assessor this week.
This is the fix to a problem that quietly cost Michigan veterans real money for years.
Under the old rules, the exemption had to be claimed with a brand-new affidavit every single year. Miss the filing window and the exemption simply lapsed for that year, and a veteran who was every bit as disabled in March as they had been in December got a full tax bill because a piece of paper did not get filed. It fell hardest on exactly the people least positioned to track an annual paperwork deadline.
Public Act 150 of 2023 changed it. Effective for the 2025 tax year forward, an approved exemption remains in place automatically each subsequent year without a new application. It continues until one of two things happens: you rescind it, which is what you do when the property stops being your homestead — you sell it, or you move — or the assessor determines the property no longer qualifies and issues a denial. A companion act added the corresponding rescission and denial process to the statute.
Two practical consequences. First, if your exemption has been approved for 2025 or later, you should not be filing again for the same property, and if someone tells you otherwise it is worth asking them to double-check against the current rule. Second, the flip side of automatic renewal is a real obligation, and this one has teeth: when the property stops being your homestead or you stop qualifying, you must file a rescission with your local assessing unit within 45 days, using State Tax Commission Form 6054. Local units are required to audit these exemptions, and one found to be improper can be denied for the current year and the three preceding calendar years, with a corrected tax bill plus interest at 1% per month. Do not leave that one for later.
The process is genuinely simple. The part that trips people up is timing and documentation, not difficulty.
You need paperwork from the U.S. Department of Veterans Affairs establishing which of the three categories applies to you — typically your VA award or rating letter showing a permanent and total determination, individual unemployability, or the specially adapted housing assistance. A letter from a county veteran services office is generally not sufficient on its own; assessors are looking for the VA's own determination.
Michigan Department of Treasury Form 5107, the State Tax Commission Affidavit for Disabled Veterans Exemption, is the single form that claims the benefit. It is short. It is available from the Michigan Department of Treasury and from most local assessor offices, and many assessors will hand you a copy and walk through it with you.
The affidavit goes to the assessor for the local unit where the property sits — your city or township, not the county and not the state. File it during the calendar year you want the exemption to apply, after January 1 and before December 31. Since Public Acts 150 through 152 of 2023, the assessor grants or denies the exemption — the March, July, and December Boards of Review no longer hear initial claims for the current year. A denial can be appealed to the Residential and Small Claims Division of the Michigan Tax Tribunal, generally within 35 days of the notice.
If you closed on the house partway through the year, do not assume you have to wait until next January. Public Act 150 of 2023 provides for proration when a qualifying veteran or surviving spouse acquires and occupies a homestead mid-year, so file soon after closing and ask your assessor how they handle it.
Once approved, it renews automatically. No annual refiling. The one thing that stays on your list is the rescission: if you sell the property or it stops being your principal residence, file Form 6054 with your assessing unit within 45 days. Missing that window is the one way this benefit turns into a bill.
The exemption is a property tax matter, handled by your assessor. But it lands squarely in the middle of a mortgage, and the sequencing is worth understanding.
A mortgage payment has four parts: principal, interest, taxes, and insurance. Most Michigan homeowners pay the tax portion monthly into an escrow account that the servicer uses to pay the summer and winter bills when they come due. Remove the property tax obligation and you remove a meaningful piece of the monthly payment — often one of the larger pieces, depending on the community's millage. Two identical houses, two identical loans, and the veteran with an approved exemption carries a materially lighter monthly payment.
VA underwriting looks at your debt-to-income ratio and at residual income — the money left over each month after the housing payment and major obligations are covered. Both are affected by the housing payment, and the housing payment includes taxes. A veteran whose file is tight on either measure can look different once the exemption is properly accounted for. How and when it gets recognized in underwriting depends on the timing of your approval and the documentation available, which is exactly why it belongs in the first conversation rather than the last.
The exemption is claimed with the assessor after you own the home, while the loan is underwritten before. That gap is where the planning happens: what your escrow is set up to collect, what happens to the account once the exemption is granted, and how an escrow analysis catches up afterward. None of it is complicated, but it goes better when someone flags it at the start. I am not your assessor and I am not your tax advisor — but I have walked Michigan veterans through this sequence enough times to know where it snags.
I'm Rob — Marine, Michigan mortgage broker, twenty years in. If you're a veteran buying or refinancing in Michigan, I'll help you figure out whether this exemption fits your situation and make sure the tax picture is in the numbers from day one instead of showing up as a surprise later. No credit pull to have the conversation.
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