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 clarifies that "taxable income" for individuals, excluding corporations, estates, or trusts, is defined as adjusted gross income with specific adjustments. Key insertions include provisions for the deduction of compensation received under the wrongful imprisonment compensation act and allowing disabled veterans to deduct certain income related to student loan discharges due to total and permanent disability. The bill also introduces new provisions for education savings accounts and ABLE savings accounts, permitting deductions on contributions and qualified withdrawals, while removing outdated language regarding retirement benefits for Michigan National Guard services and eliminating specific deductions related to oil and gas production income and expenses.

Additionally, the bill introduces changes to deductions related to gambling losses and first-time home buyer savings accounts, allowing taxpayers to deduct wagering losses not previously accounted for in their adjusted gross income and contributions to first-time home buyer savings accounts starting in 2022. It modifies personal exemptions, providing additional exemptions for taxpayers with a certificate of stillbirth and those who are at least 10 weeks pregnant. The bill also outlines specific deductions for individuals with disabilities and veterans, and introduces new provisions for the deduction of retirement or pension benefits based on birth year, with increasing deduction percentages for specific tax years. Furthermore, it allows certain public service employees to deduct their retirement or pension benefits without additional limitations starting from 2023.

Statutes affected:
House Introduced Bill: 206.30