Michigan’s New Tax Plan Could Put Money Back in Your Pocket

State legislators are arguing the people of Michigan really need this right now.

The bill, which passed in the Michigan House 65-43 in March, now moves to the Senate for deliberation. Here's how it could benefit Michigan residents:

Get our free mobile app

Rep. Kathy Schmaltz, R-Jackson, is proposing changes to the current income tax rate for individuals across Michigan with House Bill 4170. According to Schmaltz the current income tax rate for individuals in Michigan of 4.25% is not keeping up with inflation.

HB 4170 would amend the state's current Income Tax Act to include provisions for tax rate rollbacks,

Currently, the act provides that if the growth in total general fund revenue outpaces inflation in a given fiscal year, the individual income tax rate must be reduced proportionally based on the amount by which revenue growth exceeded inflation.

This temporarily tax rate rollback was previously applied to the 2024 tax year, but current verbiage states the rollback is only temporary and "applies only to a single tax year." Rep. Schmaltz hopes HB 4170 will retroactively codify the temporary tax rollback rate into statute so we don't have to restart this whole process at the beginning of each new year.

The bill would add language clarifying that, beginning with the 2026 tax year, any rate reduction calculated under the above provision is permanent and becomes the permanent rate for all subsequent tax years, unless another rate reduction is triggered by an increase in general fund revenue.

How Much Will You Save?

The bill made it through the Michigan House of Representatives with bipartisan support. While some critics claim the cut would only put about $77 back in each individual's pocket over a year, that money could fill someone's gas tank or buy groceries.

Alas, it's in the Michigan Senate's hands now! Would you be for this new proposed tax cut? Read more here.