Advocacy News – June 27, 2025
What’s happening: The Board of State Canvassers today approved language for the dangerous and misleading ballot proposal to increase Michigan’s income tax to 9.5% for income exceeding $500,000 as single filer ($1,000,000 for joint filers) including many small and midsized businesses. The Board took several hours of testimony and ultimately voted 3-1, a critical first step for proponents and their quest to get the issue on the November 2026 ballot.
- The result was dissapointing, especially because the Board was unwilling to include the term “graduated income tax” in the summary for voters even after acknowledging that it was indeed such a tax.
Why it matters: The proposed historic tax increase would be particularly devastating to smaller businesses, most of which are pass-through entities (sole proprietorships, partnerships, S corporations, LLCs) and whose income is taxed at the owner’s individual rate.
⚠️This policy would more than double the income tax rate for those entities from 4.25 to 9.25 percent. This proposal does not go after “the rich” – it goes after the business owners who provide jobs and economic opportunity, who reinvest locally, and who are now trying to survive inflation, talent shortages and regulatory overload.
It also would:
- Take money away from job providers that could be used to reinvest in their business, including employee salaries and benefits.
- Create a new graduated income tax in MI.
- Make MI the 7th highest income tax rate in the country and highest in the Midwest – nearly tripling Indiana and Ohio’s rates (3% and 3.5% respectively).
- Tax success instead of rewarding it. Business success comes with risk – personal investment, payroll responsibility, debt, and long hours. A graduated income tax means the government gets a bigger share of those rewards, even though entrepreneurs still bear 100% of the risk.
- Lead to population exodus to states with a more friendly income tax regime.
What’s next: Although the substance of the language was approved, the Board ran out of time to approve the form of the language, and will take up that component at its next meeting in July.
- Upon form approval, the supporters have 180 days to gather the required number of valid signatures (446,198) for it to go on the 2026 general election ballot.
- The Michigan Chamber will continue to play a leadership role in and fight back against this attack on Michigan businesses and showcase the catastrophic impact this would have across our communities and for the state’s economy.
Go deeper: Read our media statement in response to this disappointing action. Contact Randy Gross with questions or to get involved.