Tax & Assurance Guidance

Michigan Personal Property Tax Reform – Passage of Proposal 1

Posted on October 14, 2014 by

Margaret Amsden

Margaret Amsden

Share This

Share on facebook
Share on twitter
Share on linkedin
Share on email

Michigan voters gave final approval August 5, 2014, to a plan that will phase out Personal Property Taxes (“PPT”) that small businesses and manufacturers pay on business equipment. The reform makes the following changes to the future reporting of PPT:

  • All business owners with personal property having a Combined True Cash Value of less than $80,000 as of January 1, 2014, will be eligible for an exemption from the PPT. Combined True Cash Value is the market value of all personal property owned, leased, in the possession of or controlled by the owner or related entity within a local tax collecting jurisdiction.
  • Manufacturers are provided an expanded exemption for eligible manufacturing personal property (EMPP). EMPP is property used predominantly in industrial processing or in the direct integrated support of industrial processing. To qualify, greater than 50 percent of all of personal property of the company must be EMPP. The exemption is segregated into two parts – one for “new” property and one for “existing” property. The exemption for both new and existing EMPP begins in 2016, which reports the assessable personal property as of December 31, 2015.

“New” EMPP property, defined as purchased from January 1, 2013 and beyond, would be 100 percent exempt from PPT beginning in 2016.

“Existing” EMPP property, defined as property at least 10 years old, will be exempt from PPT. Therefore, in the first year of the exemption, 2016, any assets purchased on or before December 31, 2005 would be exempt from PPT. This will continually roll older personal property off the tax rolls until all EMPP is exempt in 2024.

Local units of government will be eligible to be made whole for the PPT losses through two sources of funding. The following replacement revenue will be phased in as the tax is phased out.

  • Essential Services Assessment (ESA) – Local governments are authorized to levy a special assessment millage tax beginning January 1, 2016, on businesses claiming the manufacturing exemptions. The ESA will be assessed to businesses claiming the EMPP exemption starting in 2016 according to the following rates:
    • 2.4 Mills for assets that are 1 to 5 years old,
    • 1.25 Mills for assets 6 to 10 years old and,
    • 0.9 Mills for assets more than 10 years old.
  • Local Community Stabilization Share Tax – Essentially this is a re-allocation of the state use tax that previously went into the General Fund and will now be dedicated to reimburse impacted local government units.

Margaret Amsden


Leading the firm’s private client services group, Margaret’s strategic & educational approach fosters a culture of learning among clients and colleagues.

Related Insights

Tax & Assurance Guidance

Foreign Tax Withholding: What You Need to Know

Posted on April 26, 2022 by

Rob Cheyne
Making service payments to a foreign person is a common cross-border transaction. U.S. taxpayers need to be aware of the applicability of withholding tax and related reporting requirements to ensure they comply and avoid unintended consequences. A U.S. payor must collect withholding tax and remit it to the IRS in the case it is applicable.

Tax & Assurance Guidance

SALT Relief for Partners and S Corps

Posted on February 23, 2022 by

Miroslav Georgiev
With small businesses supporting nearly 47% of U.S. employees, states have been advocating for pass-through entities, operating partnerships and S corporations that have been harshly impacted by the Tax Cuts and Job Act ‘s state and local taxes deduction limit. Recent legislative activity is finally providing relief for many of these businesses. 

Tax & Assurance Guidance

IRS Provides Relief on K-2 and K-3

Posted on February 17, 2022 by

Margaret Amsden
In an attempt to provide more transparency with regard to reporting of foreign activity and/or information to foreign owners, the IRS came out with two new forms: Schedule K-2 (an addendum to the Schedule K) and Schedule K-3 (an addendum to the Schedule K-1). Learn about the latest K-2 and K-3 reporting requirements issued by the IRS.

Sign up for our newsletters

Get general business and industry-specific news and knowledge straight from our accounting specialists.

The Sound of Automation Podcast

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Insights & Perspectives

Data-driven decision making: 3 key insights for business owners

What does it take to build a data-driven business? For self-reliant leaders who feel they’ve hit a plateau when it comes to scaling a business, adopting a data-driven approach can be a breakthrough success strategy. Using data in a more focused way helps good engineers become good entrepreneurs. It’s about creating balance. Here we take a look at key insights for business owners when using data in decision making.

Read More

The Sound of Automation Podcast

Industrial automation businesses are the driving force behind Industry 4.0, and Clayton & McKervey is here to help.

Skip to content