Michigan House approves extension of poverty tax exemption

Beth LeBlanc
The Detroit News

Lansing — The Michigan House approved a measure Thursday to extend poverty tax exemptions to three years instead of requiring annual renewals in certain communities. 

The measure, which was supported by Detroit Mayor Mike Duggan, passed the House 105-0 Thursday after passing the Senate 37-0 on Dec. 3. The Senate still needs to concur on the bill before it is sent to Gov. Gretchen Whitmer for her signature.

The legislation would allow communities to extend the duration of a poverty tax exemption on a principal residence up to three years for seniors on a fixed public assistance income . 

The legislation would apply to all people who received an exemption in 2019 or 2020 and extend their exemption through 2021. The bill would extend by three years the exemption for seniors who get an exemption between 2021 and 2023.

The issue was brought to the attention of Sen. Jim Runestad, R-White Lake, and Sen. Stephanie Chang, D-Detroit, when Detroit leaders were worried about the program's continuation during the COVID-19 pandemic. 

Usually, activists knock on thousands of doors and hold town halls to alert eligible residents of the exemption and renewal requirements. But the 2020 pandemic inhibited that outreach, Runestad said. 

"They said, with COVID we can’t do any of this," Runestad said. "There are so many people who might be in danger of losing their home.”

Under the legislation, if a person was found later to be ineligible for exemption, the individual would be subject to repayment of the tax with interest. 

The extension is expected to impact communities like Detroit, where 100 to 200 people a day were walking into city hall to fill out paperwork to renew their exemptions, Duggan told senators earlier this month. The renewal traffic and lines were especially concerning during the pandemic, he said. 

For elderly residents on a fixed income, the annual poverty tax exemption renewal made no sense, Duggan said. 

"Give us the option to give them three-year exemptions," Duggan said. "We'll evaluate how it goes. They still have obligations and penalties if they abuse it."