In the latest State of the State address, Gov. Gretchen Whitmer raised a number of ongoing concerns alongside policy proposals to address those concerns, ranging from Michigan’s education challenges to its recovering economy. Among those proposals are three major tax code provisions regarding electric vehicles (EV), earned income and pensions.
EV Tax Credit. According to The Detroit News, the proposed $2500 electric vehicle tax credit is intended to secure Michigan’s future in the auto manufacturing industry. The credit would be given to those that purchase an electric vehicle and charging equipment. General Motors officially stated it would invest $7 billion for electric vehicle and battery production at four Michigan sites to create 4,000 new jobs and retain 1,000 more after the state approved incentive funds for the projects valued at over $800 million1.
Michigan Earned Income. A more widespread impact for taxpayers is Gov. Whitmer’s proposal to restore the state Earned Income Tax Credit to 20% of the federal credit, more than tripling the current credit of 6%, according to U.S. News & World Report. This will result, for many taxpayers, in an increase of the average credit from $150 to $5002.
Pension Tax Repeal. Included in Gov. Whitmer’s address is the repeal of the Michigan tax on pensions. The Detroit Free Press reports that the repeal will be phased in over the next three years and is projected to save seniors around $1,000 per year. More specifically, the plan would reverse legislation enacted under former Gov. Rick Snyder which removed total and partial tax exemptions for income from public and private pensions, respectively. The new plan restores those credits and exemptions.
In addition to the proposals offered by Gov. Whitmer during the State of the State address, it is important to note that a legislative proposal was introduced in the Senate that would lower the state corporate income tax rate to 3.9% from 6% while also decreasing the personal income tax rate to 3.9% from 4.25%, according to The Detroit News. The proposed bill, which has already been voted to advance by the Michigan Senate Finance Committee, would also allow taxpayers to claim a non-refundable tax credit for each dependent under the age of 19 in the amount of $5001.
The MICPA will continue to track developments regarding these state tax proposals as new information emerges. Member can discuss how they’re preparing for changes to Michigan tax code by logging into MICPA Connect to share questions, concerns and strategies.
References:
- LeBlanc, Beth and Craig Mauger. “Michigan Gov. Whitmer Pushes…” The Detroit News. 26 Jan. 2022. Accessed 28 Jan. 2022.
- “Whitmer to Propose Tripling Tax Credit for…” U.S. News & World Report. 24 Jan. 2022. Accessed 28 Jan. 2022.
- Egan, Paul. “Whitmer to Call for Repeal of Michigan Pension Tax…” Detroit Free Press. 23 Jan. 2022. Accessed 28 Jan. 2022.