Michigan’s solar property tax exemption applies only to commercial-scale solar facilities of 2 megawatts or more, which pay a flat per-megawatt specific tax instead of regular property tax under the Solar Energy Facilities Taxation Act (Act 108 of 2023). Residential rooftop systems do not qualify, and Michigan has no separate statutory exemption shielding homeowners from an assessment increase after installing panels.1Michigan Legislature. Solar Energy Facilities Taxation Act
That split is the whole picture in one sentence, but what it means for you depends entirely on which side of it you fall on.
What Happens to a Homeowner’s Property Taxes
If you are putting panels on your roof, Michigan law does not automatically protect you from a higher assessment. The property tax exemption in MCL 211.9 is tied to facilities holding an exemption certificate under the Solar Energy Facilities Taxation Act, and that act requires at least 2 megawatts of generating capacity.2Michigan Legislature. MCL Section 211.9 A typical home system runs 5 to 15 kilowatts, which is nowhere near that floor.
In practice, whether a solar installation raises your taxable value depends on how your local assessor treats it. Under Michigan’s Proposal A cap, the taxable value of a home can only increase each year by the lesser of 5% or the rate of inflation, unless there is a transfer of ownership or new construction. Whether rooftop solar counts as “new construction” for assessment purposes varies by jurisdiction. Some assessors treat the panels as personal property rather than a real property improvement. Some do not add value for them at all. Others do.
Because the answer is local, the only reliable way to know what will happen to your bill is to call the assessor’s office in your township or city before you sign an installation contract. Ask directly how they handle residential solar, and keep a note of who you spoke with.
For context, roughly 35 states and the District of Columbia have a residential solar property tax exemption on the books. Michigan is not one of them, so the financial case for home solar in Michigan rests on electricity savings and resale value rather than a guaranteed tax shield.
Resale Value Is a Separate Question
Even without a tax exemption, owned solar systems tend to lift what buyers will pay for a home, with research reporting premiums in the range of 4% to 10% depending on system age and local market conditions. The word to watch is “owned.” Leased systems and panels tied to a power purchase agreement belong to the financing company and generally do not add to the sale price, and the contract itself can complicate a sale if the buyer does not want to assume it.
That resale premium is not a tax matter, but it is the reason many homeowners accept the uncertainty around assessments: a modest assessment increase, if one happens, can still be dwarfed by the value added at sale.
The Commercial Exemption Under Act 108
For projects of 2 megawatts of nameplate capacity (alternating current) or more, Act 108 of 2023 replaced the general ad valorem property tax with a specific per-megawatt tax. To qualify, the facility must be located in a designated solar energy district and hold a solar energy facility exemption certificate issued through the local governmental unit where the project sits.1Michigan Legislature. Solar Energy Facilities Taxation Act The exemption covers the facility itself. The underlying land is not covered and continues to be taxed normally.
The process starts with the local governmental unit establishing a solar energy district. Once the district exists, the facility owner or lessee files an application for an exemption certificate with the local clerk, on forms prescribed by the State Tax Commission. The local legislative body then has 120 days to act on the application. Once issued, the certificate exempts the facility from general property taxes for 20 years.1Michigan Legislature. Solar Energy Facilities Taxation Act
How the Specific Tax Is Calculated
In place of a value-based assessment, qualifying facilities pay a flat annual amount tied to generating capacity. The standard rate is $7,000 per megawatt of nameplate capacity (AC) each year after the facility is placed in service.3Michigan Legislature. MCL Section 211.1159 A 10-megawatt facility on a standard site therefore owes $70,000 per year, and that figure does not drift with changes in equipment market value.
The rate drops to $2,000 per megawatt for facilities sited on certain categories of property:
- Land owned by the state at the time of installation, or owned by the state immediately before a sale to accommodate the project.
- Property located in a federal opportunity zone designated under the Tax Cuts and Jobs Act of 2017.
- Sites classified as functionally obsolete, blighted, or contaminated under Michigan’s brownfield redevelopment laws.
- Improved real property already serving another purpose, where the solar facility is attached to the existing improvement.3Michigan Legislature. MCL Section 211.1159
The discounted rate is designed to steer commercial solar toward land that is already disturbed, publicly held, or in need of redevelopment, rather than onto productive farmland or undeveloped parcels.
Keeping the Certificate Valid
The 20-year exemption is not fire-and-forget. Certificate holders must file an annual form with the local governmental unit reporting current nameplate capacity, including any equipment additions or retirements during the year.1Michigan Legislature. Solar Energy Facilities Taxation Act Failing to maintain the certificate or report accurately can jeopardize the exemption for the balance of the 20-year term, so the annual filing and underlying recordkeeping are part of the ongoing cost of holding the exemption.
Document everything from the project’s origin forward: the district designation, the application and the local legislative body’s action on it, the certificate itself, equipment specifications, and each year’s capacity report. For commercial facilities this is a legal requirement, not just prudence.
Putting the Two Tracks Side by Side
The practical takeaway depends on who is asking. A homeowner looking for a Michigan solar property tax exemption will not find one written for residential systems. Whether an installation changes the assessment is a local question handled parcel by parcel, and the right call before installing is a direct conversation with the assessor. The financial case for home solar in Michigan rests on electricity bill savings and the resale premium that comes with owning (not leasing) a system.
A developer or business looking at a project of 2 megawatts or more has a defined statutory path: get the local governmental unit to designate a solar energy district, apply for the exemption certificate through the local clerk on State Tax Commission forms, wait up to 120 days for the local legislative body to act, and then pay $7,000 per megawatt annually, or $2,000 per megawatt if the site qualifies as state-owned, in a federal opportunity zone, brownfield or blighted, or already improved for another use. The exemption runs 20 years, covers the facility but not the land, and requires an annual capacity report to stay in force.