Michigan Solar Property Tax Exemption: What Homeowners Need to Know
Michigan’s effective property tax rate of 1.25% — above the national average — can make many Northern Michigan homeowners pause when considering solar, but Michigan’s solar property tax exemption is a built-in protection for exactly that concern.
How Michigan’s Solar Property Tax Exemption Works
In 2019, Governor Whitmer reinstated the Michigan renewable energy property tax exemption for residential solar after it lapsed in 2012. Michigan law (MCL 211.27) excludes solar panels from being counted as added real property value during a tax assessment. So your assessed value simply doesn’t go up. For your system not to add tax value to your home, your solar installation must be 150 kW or smaller. With most installations in Northern Michigan homes being around 8-10 kW, the majority of Michigan residents who go solar aren’t affected.
What Does Michigan’s Solar Tax Exemption Mean In Real Dollars?
Going solar is an investment that proves its worth day after day. The average turnkey solar system installation costs around $35,000 before incentives; however, the exact cost varies based on your home’s energy needs. Here’s where the savings come in: a $35,000 system adds roughly 3-4% to your home’s value. Without Michigan’s exemption, that added value would increase your assessed value and raise your tax bill every year you own the home. With the exemption, it doesn’t — your home is worth more, but your taxes stay the same.
Curious what your system could save you? Head to our website to request a free quote from Peninsula Solar.
Michigan’s Solar Sales Tax Exemption
The property tax exemption isn’t the only financial protection Michigan offers solar owners. Michigan law provides for sales tax exemptions on solar energy equipment, which may apply to your residential installation at the point of purchase. On a $35,000 system, that could represent up to roughly $2,100 in savings. Whether and how the exemption applies can depend on how your installation is structured.
Property Tax Exemption vs. Sales Tax Exemption: How They Work Together
The property tax exemption is an ongoing annual savings for as long as you own your solar system and your home, while the sales tax exemption is a one-time savings when you initially purchase your system. Together, they meaningfully reduce both the upfront cost and the long-term carrying cost of going solar in Northern Michigan.
FAQs
Does solar increase my property taxes in Michigan? No, Michigan law exempts 100% of the added value a solar system brings to your home from your property tax assessment. Your home’s market value increases, but your tax bill doesn’t.
When did Michigan’s solar property tax exemption go into effect? The exemption was reinstated in 2019 when Governor Whitmer signed House Bills 4465 and 4069, along with Senate Bill 47. It had previously been in effect from 2002 to 2012.
Is there a size limit on the exemption? Yes. The exemption applies to systems up to 150 kW in capacity. For context, most Northern Michigan residential installations fall between 8-10 kW, so the vast majority of homeowners are well within that limit.
Ready to go solar in Northern Michigan?
Michigan’s solar tax exemptions make going solar a smarter investment than many homeowners realize, and Peninsula Solar is here to help you understand exactly what that looks like for your home. We serve residents and customers across Northern Michigan and the Upper Peninsula, from Traverse City to Marquette and everywhere in between.
See what solar looks like for your home: peninsula-solar.com | (906) 235-0340
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