“As we continue to face high inflation, the people of Michigan need and deserve more significant and permanent tax relief — especially our working- and middle-class families struggling the most to make ends meet,” said Huizenga, R-Walker. “I came here to solve problems, not play power games. We have a $9 billion surplus; surely we can afford to do more to help working families and retirees — and allow all taxpayers to keep more of their hard-earned money.
“While this bill includes many items that I have supported and continue to support, such as removing taxes on retirement income and expanding the number of families that qualify for the Earned Income Tax Credit, it also includes provisions that would mean higher taxes on families in the long run. I worked to make this better but my amendment was voted down by my colleagues across the aisle. I cannot support this bill to prevent an automatic income tax reduction for all Michiganders who need this relief.”
Under a 2015 law, if revenues in Michigan’s general fund increase past a certain point, an automatic and permanent reduction to the state income tax rate is triggered. The House and Senate fiscal agencies estimate that Michigan was $700 million over the trigger’s threshold in fiscal year 2022, which would reduce the income tax rate from 4.25% to 4.05%.
HB 4001 would stop that cut by retroactively moving $800 million from the general fund to a new fund to provide one-time $180 rebates in 2023 and then directing over $1.4 billion over the next three years to the Strategic Outreach and Attraction Reserve (SOAR) Fund. It would also increase the state’s Earned Income Tax Credit (EITC) from 6% to 30% of the federal EITC beginning with the 2022 tax year and phase-in over four years an exemption on certain retirement income from the state income tax, such as public retirement or pension benefits.