Michigan Home Heating Credit

Quick Facts

Benefit type: Refundable credit issued by the Michigan Department of Treasury to help households pay winter heating bills.
Who can apply: Michigan residents with household income under state limits who are responsible for heating costs, even if they do not file a Michigan income tax return.
Credit amount: Varies by household income, number of exemptions, and heating costs. Many households receive $200–$500; large households in colder zones can exceed $1,000.
How to claim: File Form MI-1040CR-7 by September 30. You can apply even if you are not required to file Form MI-1040.
Why it matters: The credit reduces heating cost burdens and can be sent directly to utility providers to prevent shutoffs.

Program Overview

Michigan’s Home Heating Credit (HHC) provides targeted relief for residents struggling with winter energy costs. The credit is unique because it can be issued directly to the applicant or credited to utility accounts, preventing disconnections and ensuring consistent heat. It complements other assistance programs such as the State Emergency Relief (SER) program and the Low-Income Home Energy Assistance Program (LIHEAP).

The credit uses two calculation methods: the Standard Credit and the Alternate Credit (for households with high heating bills relative to income). Applicants choose the greater amount. Because the credit is funded by federal LIHEAP dollars administered by the state, it does not reduce future SER eligibility.

Eligibility Requirements

Residency: Must reside in Michigan for the entire tax year. Students temporarily living elsewhere (e.g., attending college out of state) may qualify if Michigan remains their domicile.
Income limits: Household resources must fall below thresholds published annually. “Total household resources” include income, Social Security, pensions, child support, unemployment, and certain nontaxable benefits. Asset limits do not apply.
Heating responsibility: You must be billed for heating costs or pay for deliverable fuel (propane, fuel oil, wood). Renters whose heat is included in rent may still qualify using the alternate credit formula, but the benefit may be lower.
Citizenship/immigration: Applicants must have a valid Social Security number or ITIN. Mixed-status households can apply if at least one member has a valid SSN/ITIN.
Ineligible situations: Residents of institutions where heating is included (nursing homes, prisons) and individuals claimed as dependents on another return cannot claim the credit.

Benefit Calculation

Standard Credit Formula

Determine total household resources.
Multiply by the percentage assigned to your number of exemptions (from the HHC table).
Subtract the result from the state’s standard heating allowance for your zone.
The remainder is your credit, capped at the maximum for your household size.

Alternate Credit Formula

Used if heating costs are exceptionally high. You report actual heating expenses paid during the year (including deliverable fuels). The credit equals 70% of the difference between heating costs and 3.5% of household resources, subject to maximums.

Example

Standard credit: The Smith family (four exemptions) with $30,000 resources in Zone 3 receives a heating allowance of $1,150. Percentage factor = 6.2%. Calculation: $30,000 × 0.062 = $1,860. Since the result exceeds the allowance, standard credit is zero. They use the alternate method.
Alternate credit: The Smiths paid $1,800 for propane. 3.5% of $30,000 = $1,050. Difference = $750. Credit = 70% × $750 = $525.
Senior renter: Joan, age 70, pays electric heat included in rent. With $14,000 resources and two exemptions, her standard credit is about $320. She opts to send payment directly to her utility to reduce monthly bills.

Application Process

Obtain Form MI-1040CR-7: Download from the Treasury website, request by mail, or pick up at libraries/Community Action Agencies.
Gather documentation: Income statements, benefit award letters, heating bills or receipts, and Social Security numbers for household members.
Calculate household resources: Include all taxable and nontaxable income sources listed in the instructions.
Select calculation method: Compute both standard and alternate credits to determine which yields a higher amount.
Complete the form: Provide household information, heating provider details, and sign. If you want the credit sent to your utility, include the company’s name, account number, and choose the energy draft option.
Submit by September 30: Mail to the Michigan Department of Treasury. E-filing is available through approved software providers.
Track status: Use the “Where’s My Refund?” tool or call 517-636-4486. Processing typically takes 6–8 weeks.

Coordination with Utilities and Assistance Programs

Energy drafts: When you choose the energy draft option, Treasury sends the credit directly to your utility company. The utility applies it to your account, reducing winter bills and preventing shutoffs.
Deliverable fuels: For propane, fuel oil, or wood, you may receive a warrant (check) payable to both you and the supplier. Present it to the supplier to purchase fuel.
State Emergency Relief (SER): Receiving HHC does not count against SER benefits. In fact, SER may require proof you applied for HHC.
LIHEAP/Weatherization: You can receive HHC alongside LIHEAP crisis assistance and weatherization services. The credit does not affect eligibility for federal programs.

Tips for Maximizing the Credit

File early (before March 1): Early filing ensures your utility receives payment before the coldest months end.
Keep heating receipts: For alternate credit, track every fuel delivery or utility payment. Use a spreadsheet or envelope system.
Update exemption counts: Include yourself, spouse, and dependents. Seniors and disabled individuals receive additional exemptions under certain conditions.
Check for community help: Community Action Agencies and Volunteer Income Tax Assistance sites offer free help completing the form.
Set up payment arrangements: Combine HHC with budget billing plans for predictable monthly payments.

Common Mistakes

Incorrect household resource calculation: Applicants sometimes omit nontaxable income, causing delays. Review the instruction list carefully.
Missing signatures: Unsigned forms are rejected. Both spouses must sign joint applications.
Late submissions: Forms received after September 30 are denied. Mark calendars and mail with proof of mailing.
Unverified heating provider information: Provide accurate account numbers; incorrect data delays energy drafts.
Not comparing calculation methods: Always compute both standard and alternate credits to maximize your benefit.

Example Scenarios

Propane user: The Johnson family heats with propane, spending $2,400 annually. Household resources = $28,000. Alternate credit yields $840, which they apply toward their next delivery.
Electric heat apartment: College student Leo rents an apartment with electric heat not included in rent. With $18,000 income and one exemption, his standard credit is $260, helping maintain current payments.
Senior on fixed income: Dorothy, age 75, lives alone and pays $900 yearly for natural gas. With $12,000 resources, she qualifies for a $350 credit delivered as an energy draft to her utility.

Frequently Asked Questions

Do I need to file Form MI-1040? No. You can file Form MI-1040CR-7 alone.
Can I receive the credit if I received SER? Yes. SER may require you to apply for HHC before approving crisis assistance.
Is the credit taxable? No. It is not taxable federally or by Michigan.
What if I move during the year? You must reside in Michigan all year, but you can claim expenses from multiple addresses if you moved within the state.
How do I replace a lost energy draft? Contact Treasury immediately; they will void the original and issue a replacement if funds remain.