Michigan Total Household Resources for Homestead Credit

Total Household Resources is Michigan’s income measure for the Homestead Property Tax Credit, and it counts far more than your federal adjusted gross income does. For the 2025 tax year, your Michigan Total Household Resources for the Homestead Credit must be $71,500 or less, and the maximum credit is $1,900.¹ THR starts with your federal AGI and then adds back income the federal return excludes or shelters, so most households end up with a THR that is higher than their AGI.² Both the income limit and the maximum credit adjust each year with inflation, so verify the current figures with the Michigan Department of Treasury before you file.

What Gets Added to AGI

Federal AGI counts only income subject to federal tax. THR picks up the rest. If every dollar you received was federally taxable, the two numbers would match. For most filers they don’t, because THR captures sources of support that never appear on a 1040.²

Social Security and railroad retirement benefits at the full gross amount, not just the taxable portion.
Nontaxable military pay, including combat zone exclusions and housing allowances.
Pensions and annuities in full, even when federal law exempts part or all of them.
Workers’ compensation and unemployment benefits, regardless of federal treatment.
Child support and alimony received.
Gifts, prizes, lottery winnings, and gambling proceeds above $300 per year, and bills paid on your behalf by someone outside the household above the same $300 threshold.³

Business losses work in reverse. A net loss from a business, rental property, or royalty activity cannot pull your THR down. Michigan adds the loss back. The same rule applies to net operating loss carrybacks and carryforwards.⁴ If your side business lost $5,000 and you earned $50,000 in wages, your THR picks up at least $55,000 from those two sources. Self-employed filers get caught by this rule every year.

What THR Leaves Out

Michigan excludes several forms of basic assistance so that receiving them doesn’t shrink your credit.³

Food assistance through the Bridge Card and surplus food from government agencies.
Payments from the Low Income Home Energy Assistance Program and energy assistance tax credits.
Medicare premiums withheld from your Social Security or railroad retirement check. You report the gross benefit, then subtract the Medicare portion.
The first $300 of gifts from nongovernmental sources and the first $300 of prizes, lottery, and gambling winnings.
Employer contributions toward life, accident, or health insurance premiums on your behalf.
Stipends paid to foster grandparents and senior companions age 60 or older in those federal volunteer programs.
Government rehabilitation grants that must be spent on repairs to your homestead.

Scholarships and grants used only for tuition and required fees stay out of THR, but any portion that pays for room and board must be reported. Life insurance proceeds and an inheritance from a deceased spouse generally fall outside THR as well, because they are one-time transfers rather than ongoing financial capacity.

Whose Income Counts as Part of the Household

A household is the claimant plus a spouse living in the same homestead.⁴ Other adults in the home get added in when they co-own or co-lease the property, unless they are your dependents. An adult child who shares the deed or the lease adds their earnings to your THR even if they pay nothing toward the household and keep their finances separate. A parent who lives with you as your dependent does not.

Getting this wrong cuts both ways. Including people you shouldn’t inflates your THR and can push you over the eligibility limit. Leaving out someone who belongs on the return invites a denial after Treasury cross-references other filings.

How THR Drives the Credit

The credit formula treats 3.2% of your THR as the share of property taxes you should reasonably carry yourself.⁵ Subtract that figure from your eligible property taxes (or from 23% of your annual rent if you rent), and the remainder is your preliminary credit, capped at $1,900 for 2025.¹

Suppose your property taxes are $3,200 and your THR is $50,000. Take 3.2% of $50,000, which is $1,600, and subtract it from $3,200. Your preliminary credit is $1,600. Because $50,000 sits below the phase-out threshold, you keep all of it.

Once THR crosses $62,500, the credit shrinks by 10% for every $1,000 (or fraction of $1,000) above that line, hitting zero at $71,500.⁶

$62,500 or less: 100% of the computed credit
$62,501–$63,500: 90%
$63,501–$64,500: 80%
$64,501–$65,500: 70%
$65,501–$66,500: 60%
$66,501–$67,500: 50%
$67,501–$68,500: 40%
$68,501–$69,500: 30%
$69,501–$70,500: 20%
$70,501–$71,500: 10%

If you received state family assistance or state disability assistance during the year, your credit is reduced in proportion to how much of your THR those payments represent.⁶ The credit is not eliminated, just scaled back to avoid overlap with another state housing program.

Better Treatment for Seniors and Disabled Claimants

Claimants who are 65 or older, totally and permanently disabled, paraplegic, hemiplegic, quadriplegic, or deaf use a more favorable version of the 3.2% offset.⁵ With THR of $3,000 or less, no reduction applies. The percentage then scales up: 1% for $3,001 to $4,000, 2% for $4,001 to $5,000, 3% for $5,001 to $6,000, and the standard 3.2% only above $6,000.

Seniors also get a separate, slower phase-out under MCL 206.522.⁷ A senior with THR of $21,000 or less keeps 100% of the computed credit. From there, the credit drops to 96% between $21,001 and $22,000, falls four percentage points per $1,000, and floors at 60% once THR passes $30,000. The general phase-out still kicks in above $62,500, but at every lower income level a qualifying senior ends up with a larger credit than a general claimant with the same THR.

Senior renters have an additional backstop. If the standard formula leaves rent above 40% of their THR uncovered, they can claim a credit based on that excess amount instead.⁶

Reporting THR on the Return

You compute THR on page 2 of Form MI-1040CR, which is filed with your Michigan individual income tax return.⁸ Each line on the THR worksheet corresponds to a specific type of income or exclusion. Work through it line by line rather than estimating. A THR that comes in even slightly too high can drop you into a lower credit tier or past the eligibility ceiling entirely.

Pull together your W-2s, 1099s, and Social Security statements, along with your summer and winter property tax statements if you own, or your lease and rent receipts if you rent. If you missed the credit in a prior year, you have four years from the original filing deadline to go back and claim it, so a 2025 credit can still be filed as late as April 15, 2030.⁵ That retroactive window is the most overlooked part of the program. If you had a qualifying THR in a past year and never filed MI-1040CR, you can still recover the credit.

1
State of Michigan. 2025 Homestead Property Tax Credit Information
2
State of Michigan. Total Household Resources
3
Michigan Legislature. Michigan Compiled Laws 206.510 – Income and Owner Defined
4
Michigan Legislature. Michigan Compiled Laws 206.508 – Definitions
5
State of Michigan. 2025 MI-1040CR Instructions
6
Michigan Legislature. Michigan Compiled Laws 206.520
7
Michigan Legislature. Michigan Compiled Laws 206.522
8
State of Michigan. Homestead Property Tax Credit