Advocacy News – May 20, 2022
Yesterday, the Michigan Senate and House of Representatives passed a $2.5 billion tax relief proposal, which incorporates a multitude of tax reforms. The plan was comprised of two bills: House Bill 4568, sponsored by Rep. Matt Hall, and Senate Bill 784, sponsored by Sen. Jon Bumstead.
One key provision rolls back the Michigan income tax from 4.25% to 4%. This is the second time the Republican-led House and Senate have sent an income tax rollback to Gov. Whitmer’s desk for approval. However, the previous proposal called for a rollback of 4.25% to 3.9%.
The legislation also included an expansion of the Michigan Chamber-supported Earned Income Tax Credit (EITC) from 6% to 20%. Should Governor Whitmer sign the proposals into law, the EITC will be back up to the rate it was offered at in 2011, before it was scaled back due to state budget concerns. The EITC is pro work, both an incentive to work and a reward for work. Its expansion is intended to help employers fill open positions by incentivizing work via the state’s tax code.
Other tax reforms included in the package of bills include:
- Expanding the veterans property tax cut to widows of a disabled veteran, or a widow or widower of a veteran killed in action.
- Increasing the senior income tax exemption, in addition to adjusting for inflation. Relief for seniors has been a budget priority for the governor this fiscal year, though her proposal shot for a full elimination of the state’s pension tax.
- Instituting a $500 child care tax credit for each ongoing fiscal year beginning on and after Jan. 1, 2022. An earlier attempt this year was previously vetoed by the governor.
The Legislature’s plan has been sent to Gov. Whitmer for her consideration.
The Michigan Chamber is focused on ensuring any tax relief solves problems for overburdened employers, communities and families and does not punish hard work or success of our state’s job providers, and does so in a meaningful, fiscally responsible way. As always, we’ll keep you informed of key movement and fiscal updates as the state moves through its budget process. It’s expected that the governor and legislative leaders will continue negotiations about a compromise budget that can be passed before the 2022 summer recess.
For questions or more information, please contact Leah Robinson at lrobinson@michamber.com.