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Senate Approves Tax Credit Expansion

Jan 27, 2023

This week, the Senate voted to pass legislation increasing the state’s match of the federal Earned Income Tax Credit (EITC) from 6% to 30%. Introduced by Senator Kristen McDonald Rivet (D-Bay City), the bill is estimated to deliver approximately $600 more annually for Michigan families. Currently, of the states with their own EITC, Michigan has one of the lowest percentages in the country. The proposed increase is projected to return roughly $553 million to local economies.

Earlier in the week, during a hearing by the Senate Housing and Human Services Committee, several organizations spoke in support of the bill, including the Michigan Chamber of Commerce, the Small Business Association of Michigan, the Detroit Regional Chamber of Commerce, amongst others. Additionally, nearly 230 organizations signed a letter of support. The bill passed by a vote of 27-11, with a few Republicans voting in support, along with the Democratic caucus. The bill was referred to the House Tax Policy Committee for consideration.

The federal EITC was created on a bipartisan basis by former Republican President Gerald R. Ford and a Democratic Congress. The Michigan EITC was created by former Democratic Governor Jennifer Granholm and a Republican Legislature.

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