The bill amends the Income Tax Act of 1967, specifically section 30, to modernize the definitions and adjustments related to taxable income for individuals. Key insertions include provisions for the deduction of compensation received under the wrongful imprisonment compensation act and a new deduction for disabled veterans concerning the cancellation of student loans due to total and permanent disability. The bill also clarifies the treatment of various income types and deductions, including those related to education savings accounts and ABLE accounts, while excluding certain income types, such as those from oil and gas production, from taxable income. Additionally, outdated language regarding retirement benefits for Michigan National Guard services is removed, and adjustments for various income types, including those received by resident tribal members, are specified.

Moreover, the bill introduces changes to tax deductions and exemptions, particularly for first-time home buyers and veterans. Taxpayers can deduct wagering losses from their federal income tax returns starting January 1, 2021, and contributions to first-time home buyer savings accounts beginning January 1, 2022, with specified maximum deductions. The bill also modifies personal exemptions to allow claims for stillbirths and pregnancies, establishes new limits on deductions for retirement and pension benefits based on birth year, and removes outdated references to federal laws. Notably, it adjusts the calculation of exemptions based on the Consumer Price Index to keep pace with inflation, aiming to provide tax relief to specific groups while updating existing tax law to reflect current economic conditions.

Statutes affected:
House Introduced Bill: 206.30