Property Taxes in Indiana vs Michigan
Indiana caps property taxes at 1% of assessed value for owner-occupied homes ($2,000/year on a $200K home, $4,000/year on a $400K home) with a homestead deduction that reduces assessed value by $45,000 or 60%. Michigan has no cap, uses millage rates typically resulting in 1.5% to 2.5% effective rates ($3,000 to $5,000/year on a $200K home), but offers a Principal Residence Exemption that removes up to 18 mills of school operating tax. This guide defines every term, shows exact calculations, and explains how to file exemptions in both states.
Key terms defined
Assessed value is the value assigned to your property by the county assessor for tax purposes. In Indiana, assessed value is based on market value (true tax value). In Michigan, assessed value is 50% of market value (state equalized value, or SEV), but taxable value is capped by Proposal A and may be lower than assessed value.
Homestead deduction (Indiana) reduces the assessed value of your primary residence before the tax rate is applied. Principal Residence Exemption (Michigan) removes up to 18 mills of school operating taxes from your primary residence tax bill.
Millage rate (Michigan) is the tax rate expressed in mills, where 1 mill equals $1 per $1,000 of taxable value. A home with $100,000 in taxable value at 30 mills pays $3,000/year.
Property tax cap (Indiana) limits the total property tax bill to a percentage of assessed value: 1% for owner-occupied, 2% for rental, 3% for commercial. This cap does not exist in Michigan.
Proposal A (Michigan) limits annual increases in taxable value to the rate of inflation or 5%, whichever is less, until the property is sold. When sold, taxable value resets to the new assessed value. This protects long-term owners from sharp tax increases.
Indiana property tax system
Indiana property taxes are calculated as follows: start with the gross assessed value (market value), apply the homestead deduction ($45,000 or 60% of gross assessed value, whichever is less), apply the mortgage deduction (up to $3,000), then multiply by the local tax rate. The final bill is capped at 1% of assessed value for owner-occupied homes, 2% for rentals, and 3% for commercial property.
St. Joseph County's local tax rate brings the total to approximately 3.5% to 4.5% of net assessed value before the cap is applied. The cap ensures that no matter how high the local rate, an owner-occupied home pays no more than 1% of assessed value.
Indiana also offers an additional $6,000 deduction for homeowners age 65 and older who meet income requirements, and a mortgage deduction of up to $3,000 for homes with a mortgage.
How to file the Indiana homestead deduction
- Obtain Form HT-1 (Homestead Standard Deduction Verification) from your county auditor or assessor's office.
- File the form with your county auditor by December 31 of the year you purchase the home.
- You must own and occupy the home as your primary residence. Rental properties do not qualify.
- The deduction applies automatically in subsequent years once filed. You only need to re-file if you move.
Michigan property tax system
Michigan property taxes are calculated as follows: start with the market value, divide by 2 to get the assessed value (SEV), apply Proposal A to determine taxable value (capped at inflation or 5% per year), then multiply by the local millage rate. There is no cap on the total bill.
In Berrien County and Cass County, total millage rates typically range from 30 to 50 mills depending on the township, school district, and special assessments. A home with $100,000 in taxable value at 35 mills pays $3,500/year.
The Principal Residence Exemption (PRE) removes up to 18 mills of local school operating taxes. For a home with $100,000 in taxable value, this saves approximately $1,800/year. You must own and occupy the home as your principal residence to qualify.
How to file the Michigan PRE
- Obtain Form 2368 (Principal Residence Exemption Affidavit) from your local assessor or the Michigan Department of Treasury.
- File the form with your local township or city assessor by June 1 or November 1 of the year you purchase the home.
- You must own and occupy the home as your principal residence by June 1 or November 1 to qualify for that year's exemption.
- Your closing agent typically handles this filing at closing, but verify that it was filed.
Filing and appeal reference: Indiana vs Michigan
| Requirement | Indiana | Michigan |
|---|---|---|
| Homestead filing form | Form HT-1 (county auditor) | Form 2368 / PRE Affidavit (local assessor) |
| Homestead filing deadline | December 31 of purchase year | June 1 or November 1 of purchase year |
| Where to file | County auditor (St. Joseph, Elkhart, Marshall) | Local township or city assessor (Cass, Berrien counties) |
| Assessment notice mailed | Spring (varies by county) | February or March |
| Appeal form | Form 130 (Petition for Review of Assessment) | Petition to local Board of Review |
| Appeal deadline | 45 days from assessment notice | March Board of Review meeting (check township dates) |
| Second-level appeal | Indiana Board of Tax Review (30 days from denial) | Michigan Tax Tribunal (by July 31) |
| Senior deduction/credit | Additional $6,000 deduction (income-based, Form SB-1) | Homestead Property Tax Credit up to $1,500 (income-based, MI-1040CR) |
Example calculations: $200,000 home
| Calculation Step | Indiana (South Bend) | Michigan (Niles) |
|---|---|---|
| Market value | $200,000 | $200,000 |
| Assessed value | $200,000 (market value) | $100,000 (50% of market value, SEV) |
| Homestead/PRE adjustment | Minus $45,000 homestead = $155,000 net | PRE removes 18 mills from school operating tax |
| Tax rate applied | ~3.5% to 4.5% of net assessed value | ~30 to 50 mills on taxable value |
| Annual tax before cap | ~$5,425 to $6,975 | ~$3,000 to $5,000 |
| Cap applied | Capped at 1% of $200,000 = $2,000 | No cap applies |
| Final annual tax bill | ~$2,000 | ~$3,000 to $5,000 |
Example calculations: $400,000 home
| Calculation Step | Indiana (Granger) | Michigan (Edwardsburg area) |
|---|---|---|
| Market value | $400,000 | $400,000 |
| Assessed value | $400,000 (market value) | $200,000 (50% of market value, SEV) |
| Homestead/PRE adjustment | Minus $45,000 homestead = $355,000 net | PRE removes 18 mills from school operating tax |
| Tax rate applied | ~3.5% to 4.5% of net assessed value | ~30 to 50 mills on taxable value |
| Annual tax before cap | ~$12,425 to $15,975 | ~$6,000 to $10,000 |
| Cap applied | Capped at 1% of $400,000 = $4,000 | No cap applies |
| Final annual tax bill | ~$4,000 | ~$6,000 to $10,000 |
How to appeal your property tax assessment
Indiana appeal process
- Review your assessment notice, typically mailed in spring by your county assessor.
- File a Form 130 (Petition for Review of Assessment) with the county assessor within 45 days of the notice.
- Provide evidence: recent comparable sales, an independent appraisal, or evidence of structural issues that affect value.
- If denied at the county level, you can appeal to the Indiana Board of Tax Review within 30 days.
Michigan appeal process
- Review your assessment notice, typically mailed in February or March by your local assessor.
- Appeal to your local Board of Review in March. Check with your township for the exact deadline and meeting dates.
- Provide evidence: recent comparable sales, an independent appraisal, or evidence of structural issues.
- If denied at the local level, you can appeal to the Michigan Tax Tribunal by July 31.
Tax prorations at closing
Property taxes are prorated at closing so that the buyer and seller each pay their share based on the period of ownership. In Indiana, property taxes are paid in arrears (the bill for a given year is due the following year), so sellers typically credit buyers for taxes that will come due after closing. In Michigan, practices vary by county and the timing of the closing relative to the tax billing cycle.
Frequently asked questions about property taxes
When do I file for the Indiana homestead deduction after buying a home?
File Form HT-1 with your county auditor by December 31 of the year you purchase the home. If you close mid-year, you can still file for that tax year. The deduction reduces your assessed value by $45,000 or 60% of gross assessed value, whichever is less, and caps your property tax at 1% of assessed value. Missing the deadline means you pay the higher non-homestead rate for that year, but you can file the following year.
How do I file for the Michigan Principal Residence Exemption (PRE)?
File Form 2368 (PRE Affidavit) with your local township or city assessor by June 1 or November 1 of the year you purchase the home. Your closing agent typically handles this at closing, but verify it was filed. The PRE removes up to 18 mills of school operating tax from your bill. On a home with $100,000 in taxable value, this saves approximately $1,800/year. You must own and occupy the home as your principal residence by the filing deadline.
What evidence do I need to appeal a property tax assessment in Indiana?
File Form 130 with your county assessor within 45 days of your assessment notice. Strong evidence includes: recent comparable sales of similar homes within 1 mile, an independent appraisal (cost $300 to $500), photos of structural issues or deferred maintenance, or evidence of a lower sale price than the assessed value. If denied at the county level, appeal to the Indiana Board of Tax Review within 30 days.
What is the Michigan Board of Review appeal process?
Your local Board of Review meets in March. Check with your township for exact dates and whether an appointment is required. Bring comparable sales data, an appraisal, or photos of issues affecting value. The Board issues a decision within a few weeks. If denied, you can appeal to the Michigan Tax Tribunal by July 31. The Tax Tribunal process is more formal and may require an attorney.
How does Proposal A affect my Michigan property taxes over time?
Michigan Proposal A limits annual increases in your taxable value to the rate of inflation or 5%, whichever is less, while you own the home. This means long-term owners often pay taxes on a taxable value well below the actual market value. However, when the home sells, the taxable value resets to the sale price for the new owner. This is different from Indiana, where the 1% cap limits the total bill regardless of how long you have owned the home.
Can I claim the senior property tax deduction in both states?
Indiana offers an additional $6,000 deduction for homeowners 65 and older who meet income requirements (file Form SB-1 with your county auditor). Michigan offers a Homestead Property Tax Credit of up to $1,500 based on income, claimed on your MI-1040CR tax return. If you own a home in one state and work in the other, you claim benefits in the state where the property is located.
Related guides
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