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Calculation of 2023 Inflation Rate Multiplier

Posted on January 24, 2023 by John LaMacchia

As budget season begins for many communities across Michigan, we want to bring your attention to a recent Treasury bulletin from the Michigan State Tax Commission. The bulletin in is regards to the Inflation Rate Multiplier for use in the 2023 capped value formula and the “Headlee” Millage Reduction Fraction (MRF) formula. To view the bulletin, click on the following link: Bulletin 17 of 2022 – Inflation Rate Multiplier for 2023

The calculation of the Inflation Rate Multiplier is set in statute in MCL 211.34d:

  • “Inflation rate” means the ratio of the general price level for the state fiscal year ending in the calendar year immediately preceding the current year divided by the general price level for the state fiscal year ending in the calendar year before the year immediately preceding the current year.
  • “General price level” means the annual average of the 12 monthly values for the United States consumer price index for all urban consumers as defined and officially reported by the United States department of labor, bureau of labor statistics

The calculation of the inflation rate multiplier is essential to developing the capped value formula and the “Headlee” Millage Reduction Fraction formula. As communities across Michigan enter budget season, we encourage you to pay special attention this bulletin as the impact on your community may be very different than in past years since inflation is greater than the 5% cap this year.

John LaMacchia is the League’s director of state & federal affairs. He can be reached at jlamacchia@mml.org or 517-908-0303.

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