Why do my taxes keep going up?

It is a common complaint that taxes in Ann Arbor are always going up. This often turns into frustration at the city government: why do they keep raising our taxes, and why don't they ever lower them? To answer this, we need to first look at how property taxes in Michigan work.

In Michigan, properties have two values: assessed value (AV) and taxable value (TV). The assessed value is set at 50% of a property's market value, as determined by the local assessor. When a property is purchased, its taxable value is "uncapped" and reset to equal its assessed value starting the following year.

Each year, the assessed value is adjusted based on changes in the real estate market. The taxable value also increases annually, but its growth is capped at the rate of inflation or 5%, whichever is lower.

Over time, because market values typically rise faster than inflation, the assessed value tends to grow faster than the taxable value, creating a widening gap between the two.

To get the amount you owe in taxes, the taxable value of your property is multiplied by the millage rate, which is the sum of all taxes on your property. Some of these taxes come from the city, but other taxes come from the county, the school district, the library, and the other taxing districts your property is in.

This process is set by state law, and cities and townships have no ability to deviate from it. Cities cannot simply choose to freeze or reduce your taxable value, even if local officials wanted to do so. Cities cannot lower the tax rates individuals pay based on their circumstances. Cities cannot have any effect on the taxes levied by other government bodies.

Why do taxes go up every year? Because home values go up, and in turn taxable value goes up each year. While there are years where the millage rate increases, these changes are typically relatively small compared to the increase in taxable value from inflation.

So how much of your tax bill increase is from inflation, and how much is from your tax rate increasing? Use the calculator below to find out. Put in the first full year of ownership and your 2025 taxable value. That information can be found on Ann Arbor's BSA Online property records.

If you do not live in the city of Ann Arbor, you can use the table located here to see your taxes.

NOTE: if you have done a capital improvement to your property, this may have caused your taxes to become uncapped, which will cause the calculator to be incorrect. The calculator uses the Principal Residence Exemption Millage Rate, which is the rate you pay for your home. If a property is not your home, it will have a higher millage rate.