How the University of Michigan shapes Ann Arbor — including your tax bill

You cannot really understand Ann Arbor — including its property taxes — without the University of Michigan. U-M began in Detroit in 1817 and moved to Ann Arbor in 1837. Its Ann Arbor campus enrolled 53,488 students in fall 2025. In a city this size, that many students and employees shape daily life, from neighborhood rhythms to restaurants, arts, hospitals, and football weekends.

For a homeowner, the tax wrinkle deserves a careful explanation. U-M says it owned about 9.4% of the land inside Ann Arbor as of fiscal year 2024. Its owned land and facilities are property-tax exempt. But “the university pays nothing” would be wrong: U-M reports about $24.7 million in city payments for water and sewer, fire and police services, review fees, capital work, and property tax on leased space.

The larger issue is how much Ann Arbor land is outside the ordinary property-tax base. The city’s 2026 comprehensive plan says 42% of parcel area is tax-exempt, counting university land, parks, and other exempt property. The plan says that share puts more pressure on the residential tax base as taxable land shrinks. That is one reason a city income tax has come up over the years, although Ann Arbor does not currently levy one. Our income-tax note explains that part.

There is plenty on the other side of the ledger: research, health care, culture, and a stadium with 107,601 listed seats. The short version for a buyer is that U-M gives Ann Arbor much of its energy, while also giving the city a tax map unlike most Michigan communities.