The bill amends the Income Tax Act of 1967 to update the definition of "taxable income" for individuals, introducing new deductions and exemptions aimed at specific groups, including disabled veterans and individuals affected by wrongful imprisonment. Key provisions include the allowance for deductions of compensation received under the wrongful imprisonment compensation act and income from the cancellation of student loans for disabled veterans. Additionally, it modifies retirement benefits language to include those from the Michigan National Guard without date restrictions, while eliminating certain deductions related to oil and gas production income. New deductions for contributions to education savings accounts and ABLE savings accounts are also established, with specified limits.

Further adjustments in the bill focus on enhancing tax benefits for surviving spouses and refining retirement or pension benefits based on birth year. Surviving spouses who have not remarried can claim deductions in subsequent tax years, and those born after 1945 can elect deductions against all income types. The bill introduces a tiered deduction system for retirement benefits for taxpayers born after 1945 and allows deductions for grant money received for broadband expansion. It also clarifies definitions related to corporate income tax and flow-through entities, ensuring that taxpayers with ownership in non-electing flow-through entities must add their share of positive business income to their taxable income. The amendments are set to take effect for tax years beginning on or after January 1, 2023.

Statutes affected:
House Introduced Bill: 206.30