Two Michigan Property Tax Abatement Programs Face December 31, 2025 Sunset Absent Legislative Action

Two Michigan State Senate bills, SB 721 and 722, that would have extended and revised two key property tax abatement programs for commercial properties in Michigan, were approved by the Michigan State Senate but were not brought to a vote in the State House during the current legislative session before the beginning of the Legislature’s end of year recess on December 18, 2025. As a result, both the Commercial Rehabilitation Act, Public Act 210 of 2005, as amended (“PA 210”), and the Commercial Redevelopment Act, Public Act 255 of 1978, as amended (“PA 255”), remain scheduled to sunset on December 31, 2025. Unless and until the Acts are extended by legislative action that many hope will be taken in 2026, local governments—and, in the case of PA 210, both local governments and the Michigan State Tax Commission—will lack authority to approve and issue new property tax exemption certificates under the programs for commercial developments.

The pending legislation proposed amendments to PA 210 and PA 255 to extend authorization to approve and issue tax abatement certificates under the programs through 2035 and to update several program features, including a potential increase in the maximum term of a PA 210 certificate from 10 years to 12 years. Additional consideration of the bills is expected in early 2026, subject to ongoing legislative negotiations and committee action. Our Economic Development Incentives team is actively tracking legislative developments.

PA 210 and PA 255 are critical to the viability of commercial redevelopment projects across Michigan. These property tax abatement programs promote reinvestment by reducing or exempting taxes on building improvements for up to 10 years after completion of construction under PA 210 or up to 12 years after completion of construction under PA 255. Preserving these essential economic development tools will enable local communities to continue to support development by offsetting operating costs and providing long-term property tax stability. Communities routinely rely on these programs to encourage adaptive reuse and new commercial development, including mixed-use projects, hotels, office buildings, food and beverage establishments, multifamily housing, and other qualifying commercial uses.

Our team works closely with developers to evaluate and secure incentives for commercial development projects. We are one of the few firms to regularly use the PA 255 program for commercial, non-residential developments, and we have a proven track record of working with local governments and stakeholders to navigate the approval process and facilitate successful abatement applications.

If you would like additional information regarding these property tax abatement programs or related legislative activity, please contact Richard Barr at (313) 465-7308 or rbarr@honigman.com, and Corey Levin at (248) 566-8498 or clevin@honigman.com.