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 clarify that "taxable income" for individuals, excluding corporations, estates, or trusts, is defined as adjusted gross income with specific adjustments, including the addition of gross interest income and dividends from out-of-state obligations, deductions for certain retirement benefits, and allowances for contributions to education savings accounts and ABLE savings accounts. The bill also introduces provisions for deductions related to wrongful imprisonment compensation and student loan discharges for disabled veterans. Significant deletions include the removal of specific language regarding retirement benefits for Michigan National Guard services and the elimination of certain income and expense considerations related to oil and gas production.

Additionally, the bill introduces new tax deductions and exemptions for individuals, particularly targeting first-time home buyers and veterans. Starting January 1, 2021, taxpayers can deduct wagering losses from their federal income tax returns, and from January 1, 2022, they can deduct contributions to first-time home buyer savings accounts, with maximum deductions set at $5,000 for single filers and $10,000 for joint filers. The bill also modifies existing provisions regarding personal exemptions and deductions for individuals with disabilities and veterans, removing previous language on stillbirth exemptions and introducing new definitions and limits for retirement and pension benefits based on birth years. Overall, the bill aims to provide targeted tax relief for specific groups while ensuring the tax code remains responsive to changing economic conditions.

Statutes affected:
House Introduced Bill: 206.30