Michigan taxpayers will be saving more money under a package of bills signed yesterday by Michigan Gov. Rick Snyder.
“By working to enact a simple and fair solution to fix the unintended consequences of the federal tax plan, we are ensuring that Michiganders are able to keep more of their hard-earned money,” Gov. Snyder said. “I appreciate Lt. Gov. Brian Calley and my partners in the Legislature who continue working hard to retain and improve a simple, effective, and fair tax system.”
After passing a federal tax reform at the end of last year, Congress set the value of the federal personal exemption at zero. Since the Michigan Income Tax Act used the taxpayer’s federal return to determine the number of allowable exemptions on state tax returns, the reform effectively eliminated the personal exemption at the state level – leading to an annual $1.5 billion tax increase on Michiganders.
“Restoring and increasing the personal exemption is the smart way to help Michiganders get the tax cut they deserve while keeping our tax code simple,” Lt. Gov. Calley said.
Senate Bill 748, sponsored by state Sen. Jack Brandenburg, amends the Michigan Income Tax Act to fix the unintended consequences of the federal tax reform by clarifying that individuals in Michigan may claim an exemption for themselves and each of their dependents, regardless of the number of exemptions at the federal level. The bill also increases the personal exemption to $4,050 for tax year 2018. The personal exemption will continue to increase each year, raising to $4,900 for tax year 2021. The exemption will then increase annually based on inflation. It is now Public Act 38 of 2018.
“I firmly believe that people spend their money better than government. This tax relief means government has less to spend, but I know government can do with a bit less if it means families have more,” said Senate Majority Leader Arlan Meekhof.
Senate Bill 750, sponsored by state Sen. Marty Knollenberg, amends the City Income Tax Act to ensure that residents in cities with personal exemptions can continue to claim those, as well. It is now Public Act 39 of 2018.
“We are putting the hard-working people of this state first with long overdue tax relief,” House Speaker Tom Leonard said. “This tax cut will help Michiganders keep more of the income they need to make ends meet and take home more of the paycheck they earn every day. Michigan families deserve a leg up, and we are happy to help.”
For more information on this and other legislation, visit www.legislature.mi.gov.