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 a clarified definition of "taxable income" as adjusted gross income with specific adjustments, such as adding gross interest income and dividends from out-of-state obligations, deducting certain retirement benefits, and specifying deductions for education savings accounts. Notably, new provisions are introduced for deductions related to wrongful imprisonment compensation and student loan discharges for disabled veterans. The bill also removes outdated language regarding retirement benefits for Michigan National Guard services and eliminates specific provisions related to oil and gas production income and expenses.

Additionally, the bill provides specific deductions and exemptions for disabled veterans and first-time home buyers, defining "disabled veteran" as those permanently and totally disabled due to military service. Taxpayers can deduct wagering losses from their adjusted gross income starting January 1, 2021, and contributions to first-time home buyer savings accounts beginning January 1, 2022. The bill further introduces deductions for compensation received by taxpayers or their dependents under a certain age starting January 1, 2026, modifies personal exemptions, and establishes specific deductions for retirement or pension benefits for individuals born before 1946. It also allows certain public safety employees to deduct their retirement benefits without additional limitations starting from tax years beginning January 1, 2023, thereby providing more favorable tax treatment for these individuals.

Statutes affected:
House Introduced Bill: 206.30