If you serve in the military or have served, Michigan offers one of the clearest property tax breaks in the country for fully disabled veterans, along with income tax rules that protect military pay. Michigan is home to Selfridge Air National Guard Base near Mount Clemens and the Detroit Arsenal in Warren, so it draws many military families after a PCS, which is short for Permanent Change of Station, the official military move from one duty station to another. This guide explains the main rules in plain language and points you to the state's own sources. Tax law changes, so treat these figures as a starting point and confirm the current rules before you file.
How Michigan Helps Disabled Veterans With Property Taxes
Michigan gives a full property tax exemption to its most severely disabled veterans. The U.S. Department of Veterans Affairs, known as the VA, is the federal agency that rates service-connected disabilities, and the highest rating opens the door to this benefit.
Under Michigan law, set in MCL 211.7b, real property used and owned as a homestead by a qualifying disabled veteran is exempt from property taxes. As the Michigan Department of Treasury explains, this is an all-or-nothing benefit: the property either qualifies for a 100 percent exemption or it does not qualify at all. There are no partial exemptions.
Who Qualifies
A veteran can qualify in one of three ways. You may qualify if the VA has determined you are permanently and totally disabled as a result of military service and you are entitled to veterans' benefits at the 100 percent rate. You may also qualify if the VA has rated you as individually unemployable, or if you hold a VA certificate showing you have received pecuniary assistance for specially adapted housing. The veteran must have been discharged under honorable conditions and must own and occupy the home as a homestead.
Surviving Spouses
The benefit can carry to a surviving spouse. The un-remarried surviving spouse of a disabled veteran who qualified, or who would have qualified, may keep the exemption on the homestead. The exemption continues as long as the spouse does not remarry and continues to own and occupy the home. Confirm the conditions with your local assessor.
How It Works With Your Local Tax Bill
Property tax in Michigan is assessed and collected at the local level by your city or township. You claim the disabled veterans exemption by filing Form 5107, the State Tax Commission Affidavit for Disabled Veterans Exemption, with the local assessor or the board of review, along with your VA documentation showing the qualifying rating.
One recent change makes the benefit easier to keep. Beginning January 1, 2025, once the exemption is granted it remains in effect without an annual reapplication. The exemption continues until the property owner rescinds it or the assessor determines the property no longer qualifies. If you are weighing where to settle, our guide to the military bases in Michigan can help you picture the local cost of owning a home in each market.
Military Pay and Michigan State Income Tax
Michigan has a flat individual income tax, and the rate for the 2026 tax year is 4.25 percent. The good news for military families is that the state shields service income broadly.
Military retirement pay is exempt from Michigan income tax and may be deducted to the extent it is included in your federal adjusted gross income. As the state's guidance on military retirement benefits explains, compensation paid from federal appropriations for service in the armed forces, including retirement benefits, is exempt. Active-duty military pay is also exempt from Michigan income tax. VA disability compensation is not part of your federal income, so Michigan does not tax it either. Between exempt active-duty pay, exempt retirement pay, and untaxed VA compensation, many military families owe little or no Michigan income tax on their service income. Rates and rules can change, so confirm the current details with the Department of Treasury before you file.
A Note for Military Spouses: MSRRA
If you are a military spouse, the Military Spouse Residency Relief Act, known as MSRRA, may matter to you. MSRRA is a federal law that lets a military spouse keep a home state for tax and voting purposes even after moving on military orders. You do not automatically become a Michigan resident just because your service member got orders here.
Under the related federal rules, a service member, the spouse, or both may choose the service member's home state, the spouse's home state, or the service member's permanent duty station for residency. Because that choice affects both states' taxes, confirm yours before you file. For the property tax exemption in this guide, what usually matters most is that the qualifying veteran owns and lives in the home as the homestead.
