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July 11, 2023

Citizens Research Council releases updated Outline of Michigan Tax System: Democratic majority’s 2023 tax policy changes reflected in updated edition

FOR IMMEDIATE RELEASE

Contact: Maureen McNulty Saxton, msaxton@crcmich.org, 517.485.9444

Livonia, MI – While 2021 and 2022 were two quiet years for major tax policy change in Michigan, marked by vetoes of major tax reform legislation under divided government, 2023 was anything but. The newly installed Democratic majority in the Michigan Legislature made quick work of passing sweeping tax reforms.

The Citizens Research Council of Michigan today released its annual Outline of the Michigan Tax System, representing the 38th edition of this popular publication which serves as a ready reference point for policymakers, journalists, researchers, and citizens to Michigan’s often complicated tax structure as well the statutory dedication of the revenues.

“We know people look to the Citizens Research Council for facts, not spin. That is why the Tax Outline is always one of our most downloaded publications,” said Eric Lupher, president of the Research Council.  “Michigan’s tax policies and structure are complicated and often confusing. Compiling and sharing this information, using plain English to communicate, keeps Michiganders informed about the taxes they pay and promotes accountability for their elected officials.”

Public Act 4 of 2023was the most sweeping tax reform enacted since the last Tax Outline publication. It reversed two major tax policy changes enacted in 2011. Among other things, the new law phases in the restoration of more favorable treatment of retirement and pension income and boosts the state’s Earned Income Tax Credit for low-income working households. It also creates a new $600 million earmark of Corporate Income Tax revenue for business attraction and community development purposes for the next three fiscal years.

The big tax surprise of 2023 was the resurrection of the often-forgotten income tax trigger within the state’s Income Tax Act, included as part of the 2015 road funding package. Because state revenue collections s over $1 billion in Fiscal Year 2022, the rate trigger was activated and reduced the income tax rate from 4.25 percent to 4.05 percent for 2023 only.

Additional notable tax changes covered in the updated Tax Outline include the exemption of feminine hygiene products from the Sales Tax; new Income Tax deductions for funds deposited into a Michigan First-Time Homebuyer’s Savings account; and new provisions allowing business entities to directly pay the state’s Income Tax on behalf of certain owners and partners – a move designed to maximize certain deductions on their federal returns.

The 38th edition of the Outline of the Michigan Tax System incorporates all these changes and many more.  The Tax Outline serves as an important ready reference for those interested in Michigan’s public finances. Summary descriptions outline the base, tax rate, and revenue disposition for major taxes assessed at both the state and local levels. These are supplemented by historical information on long-run revenue trends. For easy reference, archived versions of previous updates dating back to 1997 are available at https://crcmich.org/publications/outline-of-the-michigan-tax-system-archives.

Citizens Research Council releases updated Outline of Michigan Tax System: Democratic majority’s 2023 tax policy changes reflected in updated edition

FOR IMMEDIATE RELEASE

Contact: Maureen McNulty Saxton, msaxton@crcmich.org, 517.485.9444

Livonia, MI – While 2021 and 2022 were two quiet years for major tax policy change in Michigan, marked by vetoes of major tax reform legislation under divided government, 2023 was anything but. The newly installed Democratic majority in the Michigan Legislature made quick work of passing sweeping tax reforms.

The Citizens Research Council of Michigan today released its annual Outline of the Michigan Tax System, representing the 38th edition of this popular publication which serves as a ready reference point for policymakers, journalists, researchers, and citizens to Michigan’s often complicated tax structure as well the statutory dedication of the revenues.

“We know people look to the Citizens Research Council for facts, not spin. That is why the Tax Outline is always one of our most downloaded publications,” said Eric Lupher, president of the Research Council.  “Michigan’s tax policies and structure are complicated and often confusing. Compiling and sharing this information, using plain English to communicate, keeps Michiganders informed about the taxes they pay and promotes accountability for their elected officials.”

Public Act 4 of 2023was the most sweeping tax reform enacted since the last Tax Outline publication. It reversed two major tax policy changes enacted in 2011. Among other things, the new law phases in the restoration of more favorable treatment of retirement and pension income and boosts the state’s Earned Income Tax Credit for low-income working households. It also creates a new $600 million earmark of Corporate Income Tax revenue for business attraction and community development purposes for the next three fiscal years.

The big tax surprise of 2023 was the resurrection of the often-forgotten income tax trigger within the state’s Income Tax Act, included as part of the 2015 road funding package. Because state revenue collections s over $1 billion in Fiscal Year 2022, the rate trigger was activated and reduced the income tax rate from 4.25 percent to 4.05 percent for 2023 only.

Additional notable tax changes covered in the updated Tax Outline include the exemption of feminine hygiene products from the Sales Tax; new Income Tax deductions for funds deposited into a Michigan First-Time Homebuyer’s Savings account; and new provisions allowing business entities to directly pay the state’s Income Tax on behalf of certain owners and partners – a move designed to maximize certain deductions on their federal returns.

The 38th edition of the Outline of the Michigan Tax System incorporates all these changes and many more.  The Tax Outline serves as an important ready reference for those interested in Michigan’s public finances. Summary descriptions outline the base, tax rate, and revenue disposition for major taxes assessed at both the state and local levels. These are supplemented by historical information on long-run revenue trends. For easy reference, archived versions of previous updates dating back to 1997 are available at https://crcmich.org/publications/outline-of-the-michigan-tax-system-archives.

  • Permission to reprint this blog post in whole or in part is hereby granted, provided that the Citizens Research Council of Michigan is properly cited.

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