Consumer Price Index (CPI)

How Does The State of Michigan Calculate The CPI?

Starting in 1995, your property taxes were calculated on the taxable value and the increase is calculated using the prior year taxable value multiplied by the CPI or 5% whichever is lower. Unless there was a transfer of ownership then the assessed value becomes the taxable value. Also any additions or losses to the property can affect the taxable value.

The CPI (Consumer Price Index) is based on data released by the US Department of Labor, as measured by the CPI for all urban consumers for a 12 month period using the State of Michigan fiscal year.

As an example: Using the 2006 year, the 2007 CPI was calculated as follow:

1. The 12 monthly values for October 2004 thru September 2005 were averaged.
2. The 12 monthly values for October 2005 thru September 2006 were averaged.
3. The ratio of item 2 divided by 1 is calculated.

Using this formula, the average for 2004 thru 2005 was 193.5 and the average for 2005 thru 2006 was 200.6 resulting in a ratio of 1.037.

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Northville Township
44405 Six Mile Rd.
Northville, MI. 48168
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