Michigan Total Household Resources: Definition, Income, and Thresholds

Total Household Resources is Michigan’s measure of all income flowing into your home during the year, and it is the figure the state uses to decide whether you qualify for the Homestead Property Tax Credit and how large that credit will be. It is broader than the adjusted gross income on your federal return because it includes money that the IRS leaves out, such as Social Security benefits and nontaxable pensions. For returns filed in 2026, households with Total Household Resources above $71,500 are ineligible for the credit, and the full credit is only available to those at or below $62,500.¹

How Michigan Defines Total Household Resources

Total Household Resources is defined in Michigan Compiled Law 206.508.² The calculation starts with your federal adjusted gross income and then adds back anything excluded or exempt from that federal figure. The result is almost always higher than what appears on your federal 1040, sometimes considerably so.

The reasoning behind the broader measure is simple. Two households each earning $50,000 in wages look identical on a federal return, but if one also receives $15,000 in nontaxable benefits, Michigan treats them differently when deciding who needs the most help with property taxes. Federal AGI would hide that gap. Total Household Resources does not.

One rule catches many filers by surprise: losses do not reduce your total. Net business losses, net rental or royalty losses, and net operating loss carryforwards all get added back into the calculation.² Capital losses are not on that add-back list, so they continue to reduce your total through their effect on federal AGI.³

Who Counts as Part of Your Household

Before you can calculate the total, you have to know whose income to count. Michigan’s definition of a household member is wider than many people assume. The Department of Treasury includes you, your spouse, your dependents, and every other individual who normally lives with you.⁴ “Normally lives” is the operative phrase. The state does not require shared expenses or pooled finances. An adult child living in your home with their own job is a household member even if they handle their own bills.

Two exceptions apply. Someone absent from your homestead for 90 consecutive days or more during the year is not counted. And individuals who file their own separate home heating credit claim are excluded from your household for credit purposes.⁴ Getting this wrong hurts you in either direction. Counting too many people can push you over the ceiling. Leaving out someone who qualifies can trigger a denial or a repayment demand later.

Income That Counts

Michigan law defines “income” for this purpose as your federal AGI plus everything specifically excluded or exempt from federal AGI.⁵ In practice, that pulls in nearly every dollar coming into the household from any source. The items you must include are:

Wages, salaries, tips, and self-employment earnings.
Interest (including nontaxable interest), dividends, capital gains, and royalties.
Social Security benefits, supplemental security income, pension distributions, annuity payments, and IRA withdrawals.
Unemployment compensation, workers’ compensation, veterans’ disability or pension payments, FIP benefits, and foster care payments.⁶
Alimony and child support received.
Cash gifts and expenses paid on your behalf by others, to the extent they exceed $300 per year from nongovernmental sources.⁷

Foster care payments deserve a flag of their own. They are not taxable at the federal level, but Michigan explicitly requires them in your Total Household Resources.⁶ Omitting them is one of the fastest ways to trigger an adjustment.

What Does Not Count

Not every dollar flowing through the household belongs in the total. Michigan law excludes several categories entirely:

SNAP benefits and surplus food from government programs.⁵
Energy assistance grants and energy assistance tax credits.⁵
The first $300 of gifts from nongovernmental sources and the first $300 of gambling or prize winnings.⁵
An inheritance or life insurance proceeds from a deceased spouse.⁸
Government grants that must be used to rehabilitate your homestead.
Foster grandparent and senior companion stipends paid under the federal Domestic Volunteer Service Act to individuals age 60 and older.⁵
Payments received under the Michigan Wrongful Imprisonment Compensation Act.²

Personal loans, credit card advances, student loans, and money drawn from savings are also excluded. They are either borrowed money or previously counted assets, not income.⁸

Adjustments That Reduce Your Total

Beyond outright exclusions, Michigan lets you subtract certain expenses on Line 30 of the MI-1040CR. For many households, the most valuable is the health insurance premium deduction. You can subtract post-tax premiums you paid for medical, dental, vision, and prescription drug insurance, along with out-of-pocket Medicare Part A through Part D premiums that were not deducted from your Social Security check. You cannot subtract premiums for long-term care, disability income replacement, or life insurance, and you cannot subtract premiums your employer paid with pre-tax contributions.⁹

Other allowed subtractions include the deduction for self-employment tax, Health Savings Account contributions, alimony paid (if deductible federally), educator expenses, penalties on early withdrawal of savings, and self-employed health insurance premiums.⁸ Active-duty military members who moved into Michigan can also subtract their moving expenses. Each adjustment lowers your reported Total Household Resources, which can either qualify you for a larger credit or keep you under the eligibility ceiling.

The Thresholds That Decide Eligibility

For returns filed in 2026 (covering the 2025 tax year), the ceiling is $71,500. Households above that number are ineligible for the Homestead Property Tax Credit entirely.¹ The full credit is only available to households with Total Household Resources at or below $62,500. Once you cross that floor, the credit begins to shrink. It drops by 10% for the first $1,000 above $62,500, and by an additional 10% for each $1,000 increment after that.¹⁰ By the time you reach $71,500, the credit has phased out completely.¹¹

Homeowners face a second gate. The taxable value of your property cannot exceed $165,400, excluding unoccupied farmland.¹ Taxable value is not market value or assessed value. It appears on your property tax statement and is generally lower than what your home would sell for. If your taxable value is over the cap, you are disqualified regardless of your Total Household Resources. The maximum credit for the 2025 tax year is $1,900.¹¹

Both the income threshold and the taxable value cap are adjusted annually based on changes in the consumer price index and rounded to the nearest $100.¹⁰ Check the Michigan Department of Treasury’s website each year before filing, because the numbers shift.

The Residency Requirement

Total Household Resources only matters if you meet Michigan’s residency rule in the first place. You must have lived in Michigan for at least six months during the tax year to claim the credit.¹² A part-year resident who met that six-month minimum can still file a claim based on Michigan household income. Anyone who falls short of six months does not qualify, no matter how low their Total Household Resources turns out to be.

1
State of Michigan. Michigan Taxpayers Encouraged to Check Eligibility for Homestead Property Tax Credit
2
Michigan Legislature. Michigan Compiled Law 206-508 – Definitions
3
Michigan Legislature. Income Tax Act of 1967 Chapter 206
4
State of Michigan. What Is a Household Member
5
Michigan Legislature. Michigan Compiled Law 206-510
6
State of Michigan. Is Foster Care Income Taxable
7
State of Michigan. Revenue Administrative Bulletin 2015-18 – Income Tax – Total Household Resources Defined
8
State of Michigan. Total Household Resources (THR)
9
State of Michigan. Health Insurance Premiums and Total Household Resources
10
Michigan Legislature. Michigan Compiled Laws 206-520 – Credit for Property Taxes on Homestead
11
State of Michigan. 2025 Homestead Property Tax Credit Information
12
Cornell Law Institute. Michigan Admin Code R 206-30 – Homestead Property Tax Credit