(The Center Square) – Gov. Gretchen Whitmer signed a tax relief bill into law that will boost the earned income tax credit and roll back the retirement tax.
“Right now, families are facing the pinch and having tough conversations about how to make ends meet,” Whitmer said in a statement. “Today, I am proud to sign a $1 billion tax cut for seniors and working families. Getting this done will help people pay the bills, put food on the table, and afford essentials like groceries and school supplies. It will ensure seniors can keep more of what they’ve earned over a lifetime of hard work and put money back in the pockets of 700,000 working families.”
House Bill 4001 amends the Income Tax Act to phase out the retirement tax over four years and deliver an average of $1,000 to 500,000 households. Former Republican Gov. Rick Snyder had enacted the retirement tax and reduced the EITC in a 2011 tax overhaul.
The bill will quintuple the Michigan Working Families Tax Credit to 30%, up from 6%. Whitmer’s office says the expansion will deliver an average combined tax refund of $3,150 to 700,000 families.
“We are delivering on our commitment to Michiganders,” House Speaker Joe Tate, D-Detroit, said in a statement. “With the signing of this bill, we are giving retirees back their hard-earned dollars and putting more money into the hands of working families. This is meaningful relief to help support our residents and it lets them know that their priorities are our priorities.”
House Republican Minority leader Matt Hall, R-Richland Township said Republicans blocked Whitmer’s $180 checks by not giving the bill immediate effect, which would have circumvented an incoming automatic income tax cut from 4.25% to 4.05% triggered by a 2015 law.
Hall also welcomed the tax breaks for retirees and working families.
“This new law carries out our Republican plans to create fair savings for retirees and working families, building on the permanent income tax cut that will automatically go to every Michigander and every small business this year,” Hall said in a statement. “The governor tried to nip it in the bud, but this tax cut will help everyone in Michigan flourish.”
The bill will also allocate roughly $500 million annually for three years to the Strategic Outreach and Attraction Reserve fund, $50 million to a housing and community development fund, and $50 million to a revitalization and placemaking fund.
AARP Michigan State Director Paula D. Cunningham welcomed the news.
“More than a decade ago, this shameful pension tax broke a promise to retirees and forced those on fixed incomes to change their retirement plans when the rules of the game unexpectedly were rewritten,” Cunningham said in a statement. “But today, after a 12-year fight and a final push that swamped state legislators with more than 13,300 emails from AARP members, this wrong has been righted, providing relief for half a million current retirees and waves of retirees yet to come.”
