LANSING—Senate Majority Leader Arlan Meekhof, R-West Olive, today led the Michigan Senate in voting to provide tax relief for Michigan families.
“The bottom line is I think families need the money more than government does,” said Meekhof.
The Senate unanimously voted in support of Senate Bill 748, sponsored by Senator Jack Brandenburg, R-Harrison Twp., to restore the state personal exemption and increase it from $4,000 to $5,000 by 2021. Additionally, the state personal exemption is tied to the rate of inflation.
Senate Bill 748 is tie-barred to legislation that creates a state child care credit and ensures residents who live in a city that imposes a local tax can still take advantage of personal exemptions at the local level.
The increased personal exemption will result in approximately $120 more for a family of four by 2021. Families could see nearly $500 from the child care credit for the 2018 tax year.
Passage of the Federal Tax Cuts and Jobs Act (TCJA) resulted in a debate at the state level regarding the state personal exemption. Prior to passage of the TCJA, Michigan had a personal exemption of $4000. The federal tax code change brought the exemption to $0.
“Restoring the personal exemption at the state level is necessary. The Senate wants to ensure that there are no unintended consequences as a result of federal tax code changes,” said Meekhof. “Treasury has told us that federal tax changes will likely result in the state collecting $1.5 billion more in revenue. I want that money to stay with families and I want to put more dollars in the pockets of hardworking men and women.”
As part of the tax relief package, the Senate also voted unanimously to override the governor’s veto of Senate Bills 94 and 95 which accelerate the elimination of the cap on the agreed-upon value of a car, boat, or recreational vehicle that can be used to reduce sales and use tax liability on a trade-in.
“Increasing the state personal exemption, creating a state child care credit and eliminating sales tax on the difference puts hundreds of dollars back into the hands of taxpayers. I firmly believe that people spend their money better than government. The legislature has discretion over $10 billion in state spending. This tax relief amounts to a minor percentage of spending and I know government can do with a bit less if it means families have more,” said Meekhof.
Senate Bill 748 passed the Senate 37 to 0, with one member absent. Similarly, the veto override of Senate Bill 94 and Senate Bill 95 were supported by all 37 members present. Senate Bill 749 and Senate 750 are tie-barred to Senate Bill 748 and will be voted on in the Senate next week.
Senate Bill 749 amends the Income Tax Act to allow a taxpayer to claim a nonrefundable credit to the income tax that is equivalent to 100% of the federal dependent care tax credit beginning in 2018.
Senate Bill 750 ensures residents who live or work in a city that imposes a city income tax can still take advantage of personal exemptions at the local level regardless of what language changes were made in the Federal Tax Cuts and Jobs Act.
Senate Bills 748, 94 and 95 now go to the House of Representatives for consideration.
A copy of the legislation can be found via the Michigan Legislature’s website at www.legislature.mi.gov.