State Rep. Julie Alexander and the Michigan House of Representatives today approved a plan to lower taxes for everyone in Michigan.
The more than $2.5 billion tax relief plan, made possible by a large surplus of state revenue, would save taxpayers by cutting the income tax rate and boosting savings for individuals, working families, seniors, and veterans.
“Families in our Jackson community are hurting,” said Alexander, R-Hanover. “After COVID-19, people are trying to find their way in the changed economic landscape, and inflation only adds to their struggles. This tax relief will support hurting families in this time of need. People will be able to choose how to use their money.”
The plan would lower the individual income tax rate across the board from 4.25% to 4% and increase the personal income tax exemption by $1,800. Seniors age 67 and older who may currently deduct $20,000 of income individually or $40,000 jointly would be eligible for an increase of $1,800 or $3,600, respectively, with future increases automatically adjusted for inflation.
Families would be eligible for a $500 nonrefundable tax credit for each dependent 18 years old or younger. The state Earned Income Tax Credit, which offers savings for lower-income families and individuals, would be increased from 6% to 20% of eligible income.
Under state law, a veteran with a permanent and total disability resulting from military service is exempted from paying property tax on their home. The plan would also apply this exemption to an eligible veteran’s surviving spouse. Veterans with a disability determined to be between 50% and 100% would be eligible for a property tax credit up to $2,000. Finally, the state would pay local governments to prevent lost revenue from the veteran exemptions.
“The state made a promise to help our veterans, and local communities have had to foot the bill,” Alexander said. “This change will expand support for our veterans and their families, while taking pressure off our local governments.”
The bulk of the tax plan, contained in House Bill 4568, passed the Senate and House of Representatives today and now advances to the governor for consideration. The remainder of the plan in Senate Bill 784 passed the Senate and is expected to pass the House early next week.
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