The bill amends the Income Tax Act of 1967, specifically section 30, to modernize the definitions and adjustments related to taxable income for individuals. It introduces new provisions allowing deductions for retirement benefits, education savings accounts, and compensation from wrongful imprisonment. Notably, for tax years beginning on or after January 1, 2025, disabled veterans will be able to deduct income from canceled student loans due to total and permanent disability. The bill also removes outdated language, such as the phrase "Beginning January 1, 2012" regarding retirement benefits for the Michigan National Guard, and clarifies the application of wrongful imprisonment compensation deductions across all relevant tax years.

Additionally, the bill establishes new deductions for first-time home buyer savings accounts, allowing taxpayers to deduct contributions up to $5,000 for single filers and $10,000 for joint filers, with specific rules for interest and withdrawals. It introduces a new exemption for stillbirths and adjusts personal exemptions based on the Consumer Price Index for tax years starting after January 1, 2013. The bill also sets limits on retirement or pension benefit deductions based on the taxpayer's birth year and allows certain public safety employees to deduct retirement benefits without limitations starting in 2023. These amendments are intended to be retroactive, applying to tax years beginning on or after January 1, 2023.

Statutes affected:
Substitute (H-3): 206.30
House Introduced Bill: 206.30
As Passed by the House: 206.30