Michigan Gov. Gretchen Whitmer and top Democratic lawmakers have announced a framework agreement that would provide the largest tax break to residents in decades. The Lowering MI Costs plan, which includes repealing the state's tax on retirement income, increasing the Working Families Tax Credit, and providing inflation relief checks to all Michigan taxpayers, will save 500,000 households an average of $1,000 a year and put an average of $3,150 back into the pockets of 700,000 Michiganders.
The plan, which is awaiting approval from the Legislature, would repeal the retirement tax to save 500,000 households an average of $1,000 a year, increase the Working Families Tax Credit to put an average of $3,150 back into the pockets of 700,000 Michiganders, and deliver inflation relief checks to all Michigan taxpayers.
In addition to the repeal and increase, the plan would also expand the Earned Income Tax Credit that applies to families making less than $57,000 a year, averaging savings of about $2,467 in Michigan.
The amount of the inflation relief checks has not yet been released, and Senate Minority Leader Aric Nesbitt, a Republican from Van Buren County, said he is “cautiously optimistic” about Whitmer's commitment to tax relief. Whitmer has said she anticipates bipartisan support for the plan, saying, “I do think we’re analyzing it. We’ll take a look but long the books is step one.”
There has been speculation that in addition to reforming the so-called pension tax and increasing the Earned Income Tax Credit (EITC) for working families, that more tax changes could be made and additional funds could be routed to economic development.
The House and Senate have each passed bills in the first week of session that would boost the EITC and roll back the retirement tax. The leader of a business group, however, is proposing a compromise that he says would benefit more people.
At the January Consensus Revenue Estimating Conference, it was projected that the state's income tax rate would drop from 4.25% to 4.05%, as outlined in a 2015 law. However, Lightner suggested that redirecting the funds could mean that the tax cut would not take place.
0. “Whitmer, Democrats Agree Upon Massive Tax Relief Plan” 9&10 News, 4 Feb. 2023, https://www.9and10news.com/2023/02/03/whitmer-democrats-agree-upon-massive-tax-relief-plan
1. “Michigan Democrats reach deal on wide-ranging tax cut, featuring rebate checks” Detroit News, 3 Feb. 2023, https://www.detroitnews.com/story/news/local/michigan/2023/02/03/michigan-legislature-democrats-tax-cut-rebate-checks/69870044007/
2. “Whitmer, Democrats propose tax cut package | News/Talk/Sports 94.9 WSJM” News/Talk/Sports 94.9 WSJM, 3 Feb. 2023, https://www.wsjm.com/2023/02/03/whitmer-democrats-propose-tax-cut-package/
3. “Bill rolling back Michigan's retirement tax heads to conference committee ⋆ Michigan Advance” Michigan Advance, 2 Feb. 2023, https://michiganadvance.com/2023/02/02/bill-rolling-back-michigans-retirement-tax-heads-to-conference-committee
4. “Whitmer, Democratic leaders agree on tax plan framework, provide few details ⋆ Michigan Advance” Michigan Advance, 3 Feb. 2023, https://michiganadvance.com/blog/whitmer-democratic-leaders-agree-on-tax-plan-framework-provide-few-details/
5. “Business group to Michigan Legislature: Extend tax cuts to more seniors” Bridge Michigan, 1 Feb. 2023, https://www.bridgemi.com/michigan-government/business-group-michigan-legislature-extend-tax-cuts-more-seniors
6. “Former pension tax bill goes to conference committee; Republicans worry it will see major changes” WKAR, 2 Feb. 2023, https://www.wkar.org/wkar-news/2023-02-02/former-pension-tax-bill-goes-to-conference-committee-republicans-worry-it-will-see-major-changes