This bill amends the Income Tax Act of 1967 by modifying Section 51 and adding new sections 51a and 695a. It establishes a tax rate on taxable income for individuals, with specific rates set for different time periods. Notably, it introduces a mechanism for reducing the tax rate based on the percentage increase in general fund revenue compared to the inflation rate, with the state treasurer and fiscal agency directors responsible for determining these adjustments. The bill also clarifies definitions related to taxable income and the Consumer Price Index.

Additionally, the bill outlines how revenue collected from the income tax will be allocated starting October 1, 2025, including specific percentages directed to the state school aid fund, agricultural preservation fund, renew Michigan fund, Michigan transportation fund, and other designated funds. It repeals several existing sections of the Income Tax Act, streamlining the law and updating the distribution of tax revenues.

Statutes affected:
Substitute (S-2): 206.51, 206.695
Senate Introduced Bill: 206.51