On Tuesday, April 12, Governor Snyder, Senate Majority Leader Richardville, and House Speaker Bolger came to an agreement on tax reform. The following elements are part of this plan based on the original framework as proposed by Governor Snyder:
- Repeal the MBT – while honoring commitments to those with “certificated” credits.
- Individual Income Tax Rate will be frozen at 4.35% and roll-back to 4.25% on 1/1/13.
- Corporate Income Tax of 6%
- Small business, partnerships, sole proprietorships, limited liability corporations, etc. will pay a 4.35% tax on business profits under the individual income tax.
Retirement/Pension Tax Changes:
- Seniors/Retirees over 67 years of age as of January 1, 2012 will NOT lose their exemptions on pensions and other retirement income (grandfathered).
- People 60-66 years of age as of January 1, 2012 will receive an exemption for all Social Security income PLUS a $20,000 for single filers or $40,000 for joint filers retirement income exemption. (Retirement income includes public pensions, private pensions, 401ks, IRAs). When people born between Jan. 1, 1946 and Dec. 31, 1952 turn 67, they’d qualify for a senior income exemption of $20,000 for a single filer and $40,000 for joint filers, regardless of income source.
- People 59 years of age and under as of January 1, 2012 will be part of the new program. When this group turns 67 years old, they will receive a $20,000 single filer or $40,000 joint filer special senior exemption against all types of income. This is regardless of income source and can be taken instead of the Social Security and personal exemptions if it would result in more generous tax treatment to the individual.
Homestead Property Tax Changes:
- The Homestead Property Tax Credit will go from 60% to 100% for people with household incomes between $0-$20,000.
- For household incomes between $20,001 - $30,000, the Homestead Property Tax Credit will be phased down from 100% to 60%.
- For household incomes greater than $30,000, the Homestead Property Tax Credit would be 60%.
- The credit for persons with disabilities would remain at 100%.
- The maximum credit would remain at $1,200 and would be phased out for income between $41,000-$50,000.
All other changes as originally proposed by the Governor remain intact as part of this agreement.
The Michigan Chamber has expressed support for this compromise plan and we will be actively working for passage. We strongly encourage Chamber members to contact legislators and ask them to SUPPORT this compromise tax plan! We need job providers to be actively speaking out in support of tax reform that will create a business tax climate that is inviting, and conducive to job growth!!
While it is certainly encouraging that the Administration and Legislative Leadership have reached this agreement – they still need to vote! And we need your help in asking them to support this.