EITC & RETIREMENT INCOME DEDUCT.                                                                                         H.B. 4001:

                                                                                                                                                              SUMMARY AS ENROLLED







House Bill 4001 (as enrolled)

Sponsor:   Representative Angela Witwer

House Committee:   Tax Policy

Senate Committee:   Committee of the Whole


Date Completed:   3-6-23




The bill would amend the Income Tax Act to allow a taxpayer, beginning in the 2023 tax year, to choose between the current limitations on the deductibility of retirement and pension income or the limitations specified in the bill. The bill would increase, from 6.0% to 30.0%, the Earned Income Tax Credit (EITC), beginning with the 2023 tax year, and specifies that a taxpayer who claimed the EITC in the 2022 tax year would be eligible for an additional credit equal to 24% of the amount he or she would be allowed to claim as a Federal EITC in the 2022 tax year. The bill specifies that if it took effect before April 18, 2023, an eligible taxpayer could receive a rebate of his or her individual income tax (IIT) for 2022. (Note: the bill did not receive sufficient votes for immediate effect, thus, these changes would not take effect by the date specified). The bill also would modify the distribution of IIT revenue to the School Aid Fund (SAF), and the distribution of corporate income tax (CIT) revenue to various funds.




The bill would make changes to Sections 30, 51, 272, and 695 of the Act, as well as add new sections to create the Michigan Taxpayer Rebate Fund (MTRF) and provide tax rebates against tax year 2022 liability. Because the bill was passed without immediate effect, several provisions of the bill would not have any fiscal impact and other provisions would have a different impact than if the bill had been passed with immediate effect. The bill's changes would combine to have no fiscal impact in fiscal year (FY) 2021-22 and to reduce General Fund revenue by $560.0 million in FY 2022-23, $1,729.2 million in FY 2023-24, $1,391.6 million in FY 2024-25, $944.6 million in FY 2025-26, and approximately $983.6 million per year in later fiscal years. The changes also would increase revenue to several funds. Strategic Outreach and Attraction Reserve (SOAR) Fund revenue would increase by $460.0 million in FY 2022-23, $465.0 million in FY 2023-24, and $500.0 million in FY 2024-25; Michigan Housing and Community Development Fund revenue would increase by $50.0 million per year beginning in FY 2022-23; and Revitalization and Placemaking Fund (RPF) revenue would increase by $50.0 million per year in FY 2022-23, FY 2023-24, and FY 2024-25. The bill's proposed increase in revenue to the MTRF in FY 2021-22 would not occur.



(Please note: The information in this summary provides a cursory overview of previous legislation and its progress. It does not provide a comprehensive account of all previous legislative efforts on the relevant subject matter.)


The EITC portions of the bill are, in part, a reintroduction of Senate Bill 417 of the 2021-2022 Legislative Session. The bill received hearings in the Senate Committee on Finance but saw no further action. Another bill from that session, House Bill 4568, would have increased the specified percentage to 20% (in addition to proposing several tax changes). It was vetoed by Governor Gretchen Whitmer in June 2022.


MCL 306.30 et al.       &#