House Speaker Matt Hall has outlined a proposal to cut property taxes in Michigan, which would be funded by introducing a partial sales tax on certain services considered “luxury” items. The announcement, made on February 24, 2026, comes amid growing concerns over rising property taxes driven by inflation and high housing prices caused by limited inventory.
Much of Michigan’s property tax law is set in the state constitution under Proposal A, making legislative solutions challenging. The National Federation of Independent Business (NFIB) acknowledged the significance of efforts to eliminate personal property taxes and reduce real property taxes but voiced concerns about expanding the sales tax to services.
“NFIB appreciates the bold approach to eliminate the personal property tax and lower real property, we have great concerns about any expansion of the sales tax to services.”
The NFIB is currently gathering more details about the proposal and plans to inform legislators about potential negative impacts on small businesses. Once all relevant information and a complete list of affected services are available, NFIB will send out a special ballot to its members for input on whether to support, oppose, or remain neutral regarding the proposal.
Key components of the proposed reforms include eliminating the personal property tax for commercial and industrial businesses (with manufacturing already exempt), removing the 6-mill state education tax on real property—which would save an average homeowner around $900—and eliminating both the real estate transfer tax and the pop-up tax that reassesses residential properties at sale.
The estimated cost of these measures ranges from $4 billion to $5 billion. The anticipated overall reduction in taxes is approximately $270 million. To offset this loss in revenue, a partial sales tax would be applied to luxury services such as limousines, country club memberships, private jets, marinas, tourist services, travel agencies, skiing, golf courses, artificial intelligence services, newspaper publishing, performing arts events, environmental consulting and political advertisements.
Everyday consumer services like nail salons, barbershops, landscaping companies, healthcare providers, car repair shops, child care centers, veterinary clinics as well as dry cleaning and streaming platforms would not be subject to this new sales tax. Business-to-business transactions are also exempt from taxation under this plan.
