Disabled Veteran Benefits in Michigan

Michigan exempts the homestead of a disabled veteran from property tax entirely. You qualify three ways: the VA has found you permanently and totally disabled and entitled to benefits at the 100% rate, the VA rates you individually unemployable, or you have received VA money for specially adapted housing. You must be a Michigan resident, discharged under honorable conditions, and hold title alone or jointly with your spouse.

There is no income or asset test. There are also no partial exemptions: the state says a property either qualifies for a 100% exemption or does not qualify at all, so a home also used for a business other than farming is out. A surviving spouse keeps the exemption for as long as they do not remarry, including on a home bought after the veteran's death.

You file Form 5107 with the assessor in your city or township, not with the state, between January 1 and December 31 of the year you are claiming. For taxes levied from January 1, 2025 you file once: the exemption stays in place without reapplying until you rescind it or the assessor denies it.

The state sets a taxable value allowance by rating: $3,500 at 10% to 50%, $4,000 at 60% to 80% and $4,500 at 90% to 100%. You divide that allowance by your home's taxable value, and the result is the share of your property tax the state pays back. The lower your home's taxable value, the bigger the share. Renters can claim it too: the state counts a rented apartment as a homestead.

The limits are for tax year 2025, the form in use now. The credit tops out at $1,900. A home with a taxable value above $165,400 does not qualify, and neither does a household with total resources above $71,500. The credit shrinks by 10 percent for every $1,000 of household resources over $62,500.

You do not need to owe income tax. The state veterans agency confirms an eligible veteran can file the MI-1040CR-2 by itself and receive the credit as a refund. A surviving spouse of a veteran with a service-connected disability can claim it too.

Michigan has two Disabled Veteran plates. With a total or permanent total rating and an honorable discharge you are entitled to one permanent plate for a private passenger vehicle. It never expires and carries no tab. State law exempts it from the registration tax, and the veterans agency lists a one-time $5 administrative fee when it is first issued.

Since April 2025 a rating of 50% to 90% earns one standard Disabled Veteran plate. The law's tax exemption covers only the totally disabled veteran's plate, so this one expires on your birthday and is renewed like any other registration. A surviving spouse can keep using either plate.

Neither plate is a parking permit. You still need a disability placard to use a disability parking space.

Michigan charges for state parks by vehicle, through the Recreation Passport. The Department of Natural Resources does not require one for a Michigan-registered vehicle with a valid Disabled Veteran plate, and the same goes for ex-prisoner of war and Medal of Honor plates. The DNR is explicit that the exemption belongs to the plate and registration, not the person. The state veterans agency describes this as free entry for 100 percent disabled veterans who have the plate. Camping and lodging fees are separate and still apply.

Hunting and fishing are tied to the rating itself. A Michigan resident veteran found permanently and totally disabled at the 100% rate, or rated individually unemployable, gets any hunting or fishing license that does not need a separate application free of charge. Licenses that go through an application, such as elk and bear, are not covered. Have your VA documentation of eligibility with you when you get the license and in the field.

Michigan's education benefit is aimed at your children. The Children of Veterans Tuition Grant pays up to $2,800 per academic year, which is $1,400 a semester full-time, for up to four academic years and $11,200 in total. The veteran must be totally and permanently disabled from a service-connected illness or injury as determined by the VA, or have died from one, or be missing in action. The veteran must also meet a Michigan residency rule.

The student must be the veteran's natural or adopted child, older than 16 and under 26, a Michigan resident for 12 months before applying, an undergraduate enrolled at least half-time, and must hold a 2.25 GPA. There is a one-time application through the MiSSG Student Portal and a FAFSA every year.

For the veteran, the state's promise is in-state tuition regardless of residency. For your own schooling, the state veterans agency points disabled veterans to the VA's Veteran Readiness and Employment program, which includes post-secondary training at a college, vocational, technical or business school.

Michigan does not tax military retirement benefits. The Department of Treasury says they are exempt, and you subtract them on Schedule 1 to the extent they are in your adjusted gross income. A surviving spouse can claim the same subtraction.

VA disability compensation is a tax-free payment, in the words of both the VA and the state veterans agency. The agency adds that military disability retirement pay received for injury or sickness from active service is not included in taxable income either.

One catch for the property tax credit above: VA compensation is not taxed, but you do enter it on the MI-1040CR-2 as part of your total household resources.