House Passes Tax Reforms

Liz Gullett

Feb 10, 2023

The House passed one of the Democratic caucuses’ priorities, voting on legislation providing a number of tax reforms. Introduced by Representative Angela Witwer (D-Delta Twp.), the bill phases out the current three-tier retirement tax system so that all taxpayers could claim the maximum deduction allowed. The proposal also increases the Earned Income Tax Credit in Michigan from 6% to 30% of the federal credit, beginning in the 2023 tax year. Additionally, the bill creates the Michigan Taxpayer Rebate Fund, which would provide a $180 rebate to every eligible taxpayer. If the bill is given immediate effect, the rebate would be issued for the 2022 tax year. That piece of the legislation was one of the reasons all but one Republican member voted in opposition to the bill. By shifting $800 million to pay for the rebates, an income tax rollback that was previously passed into law does appear that it will go into affect. All members of the Democratic caucus except for one voted to pass the legislation. After the House passed the bill on Thursday, it was sent to the Senate. However, they did not vote on the bill that evening and are expected to hold a vote next week.

This reform package has been worked on over the last several weeks by both chambers and the administration. Governor Whitmer called for similar changes when she presented her executive budget recommendations, and this has been a priority of the Democratic caucuses in both chambers. The bill was earlier sent to conference committee after the chambers passed different versions of the proposal.

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