The proposed bill amends the Income Tax Act of 1967 by adding a new section, 272b, which introduces a tax credit for qualified taxpayers. Starting from tax years beginning on or after January 1, 2025, eligible taxpayers can claim a credit of $5,500 for each qualified dependent, defined as a dependent aged four years or younger. However, taxpayers enrolled in the Rx Kids program, which is administered by Michigan State University and the University of Michigan, are ineligible for this credit in the same tax year. Additionally, the credit amount will be reduced by any advance refund payments issued to the taxpayer for that year.

The bill also establishes a program for monthly advance refund payments to qualified taxpayers, based on their previous year's tax return. These payments will be made in equal amounts, with adjustments possible for any discrepancies from prior payments. Taxpayers will receive written notice of their advance refund payments before January each year, and payments can be disbursed electronically or via check. If the credit exceeds the taxpayer's tax liability, the excess amount will be refunded. The bill outlines definitions for "qualified dependent," "qualified taxpayer," "Rx Kids program," and "state median income" to clarify eligibility and program parameters.

Statutes affected:
Senate Introduced Bill: 206.1, 206.847