Michigan’s personal income tax will remain 4.25% for the foreseeable future after Gov. Gretchen Whitmer on Friday vetoed a bipartisan bill that would have lowered it to 4.0%.
House Bill 4568 and Senate Bill 784 were vetoed or, in the case of SB784, vetoed in effect on Friday. The bills were tie-barred, which means neither bill could pass without acceptance of the other bill under consideration.
According to a House Fiscal Analysis, the bills aimed to:
- Reduce the individual income tax rate from 4.25% to 4.0% beginning Jan. 1.
- Increase the personal exemption amount by $1,800, after inflation adjustments, beginning with the 2023 tax year.
- Increase the earned income tax credit from 6% of the federal credit to 20% of the federal credit beginning with the 2022 tax year.
- Provide a $500 nonrefundable child tax credit for tax years beginning on or after Jan. 1.
- Increase the standard deduction against all types of income for taxpayers who are 67 years old or older to $21,800 for a single return and $43,600 for a joint return beginning Jan. 1.
- Require limitations on deduction amounts for certain taxpayers to be adjusted annually for inflation beginning with the 2024 tax year.
- Provide a mechanism for the state to reimburse local units of government for the property tax exemption available to veterans classified as 100% disabled and their surviving spouses and extend those exemption provisions to include the surviving spouses of servicemembers killed in action.
- Provide a credit of up to $2,000 (adjusted annually for inflation) for property taxes paid by veterans who are at least 50% disabled.
The costs of the bills would have been offset by the state’s $6 billion surplus.
Legislators noted with opprobrium the governor’s vetoes of their most recent attempts to lessen the one-two blows of inflation and high gasoline prices.
For example, Whitmer had also previously vetoed House Bill 5570, which would have imposed a moratorium on the state’s 27-cent-per-gallon gas tax from April 1 to Sept. 30.
“As opposed to the governor’s targeted relief tactics that will only result in more money being printed and worsening this economic crisis, our plan would have provided broad relief to all Michigan taxpayers during these extraordinary times of high inflation,” Rep. Steve Carra, R-Three Rivers, said in a statement. “Many of our neighbors cannot continue to bear the rising costs of gas and groceries, leading to both Democrats and Republicans supporting this plan. Our governor is simply choosing to work against our Legislature, and thus, not for the people of Michigan.”
The House and Senate had reached a compromise on Senate Bill 768 in early March, but it too was vetoed by the governor. As The Center Square reported, that bill would’ve included a reduction of the state’s corporate tax rate from 6% to 3.9%.
The bill also would have provided a $500 dependent child tax credit and more than tripled the Earned Income Credit. In addition, the bill would allow exemptions for income of individuals aged 62 and older on savings of $40,000 as a single filer, or $80,000 filing jointly, and expanded property tax relief for disabled veterans.
“High prices, raised by inflation, have distressed northern Michigan families and strained their budgets,” said Rep. Ken Borton, R-Gaylord. “While legislators approved a bipartisan, commonsense plan to save Michigan taxpayers their hard-earned dollars and cents, Governor Whitmer has again shown she is completely insensitive to the sting of inflation felt by working Michiganders.”