Tax Cuts Signed Into Law

Democratic majorities, Governor Whitmer deliver largest tax cut in decades

LANSING — This week, Governor Gretchen Whitmer signed the largest tax cut in decades when she signed a bill that included the Working Families Tax Credit and a repeal of the Pension Tax that was signed into law in 2011 by then governor Rick Snyder as a way to make up lost revenue for a massive business tax giveaway.

“I’ve held office in the House for three terms, and each term, I introduced a bill to repeal the retirement tax: I’m so happy for Michiganders that we finally got it across the finish line,” said Rep. Angela Witwer (D-Delta Township). “In addition to repealing the retirement tax, which has been eating away at the finances of older Michiganders for over a decade, we are also expanding the working families tax credit and ensuring that our state is ready to lead in 21st-century green manufacturing. I’m grateful that members on both sides of the aisle could come together, set aside our differences, and do the right thing for our state.”

House Bill 4001 sponsored by Representative Angela Witwer is now Public Act 4 of 2023 and will quintuple the earned income tax credit for Michigan families and eliminate the pension tax for Michigan seniors.

“Right now, families are facing the pinch and having tough conversations about how to make ends meet,” said Governor Whitmer. “Today, I am proud to sign a $1 billion tax cut for seniors and working families. Getting this done will help people pay the bills, put food on the table, and afford essentials like groceries and school supplies. It will ensure seniors can keep more of what they’ve earned over a lifetime of hard work and put money back in the pockets of 700,000 working families. I will continue to work with our legislative partners to build on this progress, grow our economy, and lower costs for every Michigander.”

A similar bill was sponsored by Senator Kristen McDonald Rivet who represents the Tri-Cities area – an area represented by Republicans for decades.

“When Democrats lead with our values and unite around creating meaningful opportunities, we’re able to do really big things,” said Sen. Kristen McDonald-Rivet (D-Bay City). “Michigan’s working families and retirees needed us to go big and we did. I’m proud my working families tax credit expansion is part of this historic, massive tax relief. A million Michigan kids and their working parents will get game-changing stability. Tens of thousands will move out of poverty. Our small businesses will gain from the credit’s incentive to work and our entire state will benefit from the half a billion dollars it will pump back into local economies.”

Details of each component of the bill are below:

Retirement Tax

House Bill 4001, sponsored by State Representative Angela Witwer (D-Delta Township), amends the Income Tax Act to phase out the retirement tax over four years and ultimately deliver an average of $1,000 to 500,000 households. The bills also equalizes the exemption on both public and private pensions.

Working Families Tax Credit

House Bill 4001 will quintuple the Michigan Working Families Tax Credit match of the federal Earned Income Tax Credit to 30%, up from 6%. This expansion will deliver an average combined tax refund of $3,150 to 700,000 families, directly impacting nearly one million kids – almost half the kids in Michigan.

The bill signing was praised by working family and senior advocates across the state:

“More than a decade ago, this shameful pension tax broke a promise to retirees and forced those on fixed incomes to change their retirement plans when the rules of the game unexpectedly were rewritten,” said AARP Michigan State Director Paula D. Cunningham. “But today, after a 12-year fight and a final push that swamped state legislators with more than 13,300 emails from AARP members, this wrong has been righted, providing relief for half a million current retirees and waves of retirees yet to come. AARP applauds the governor and those legislators who elevated the repeal of this tax as a top priority and voted yes.”

“For many years, we have advocated for an increase to the state’s Earned Income Tax Credit, and we are thrilled to see Governor Whitmer sign this substantial boost for working families into law today,” said Dr. Darienne Hudson, President and CEO of United Way for Southeastern Michigan. “Raising Michigan’s EITC to 30% of the federal credit will directly benefit more than 2 million Michigan children by providing a meaningful increase to working families’ incomes, many of whom are still struggling in the wake of the pandemic and whose budgets have been strained by inflation. We applaud Gov. Whitmer and the members of the legislature who supported this truly meaningful investment in households across the state.”

 “The Michigan Education Association applauds Gov. Whitmer for providing relief to hard-working retirees by rolling back the unfair retirement tax,” said Michigan Education Association President Paula Herbart, a veteran teacher from Macomb County. “Many Michigan educators planned for their retirement expecting their pensions would be tax-free — but a decade ago, retirees had the rug pulled out from under them through an unfair tax hike on those who could least afford it. The governor and our new legislative leaders have righted a wrong, and thanks to their hard-fought efforts, Michigan seniors and families will finally receive some much-need money back in their hands.”


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