What is the maximum percentage increase of Taxable Value per year?

The correct answer is based on the regulations governing property tax in Michigan, specifically regarding the increase of Taxable Value. In Michigan, the maximum percentage increase in a property’s Taxable Value per year is limited to 5% or the rate of inflation, whichever is lower.

This regulation aims to provide property owners with some protection against sharp increases in property taxes due to rapidly rising market values. The rationale behind this policy is to ensure that property taxes remain manageable for homeowners while still allowing for reasonable growth in revenue for local governments.

When the rate of inflation is below 5%, the increase is tied directly to the inflation rate, effectively capping the annual increase at that lower figure. Conversely, when inflation exceeds 5%, the increase is capped at 5%. This mechanism helps maintain a balance between accommodating local government revenue needs and protecting homeowners from excessive tax burdens.

This understanding helps reinforce the importance of monitoring inflation rates and property values in the context of property taxation in Michigan.