Michigan House to Vote on Bill to Roll Back State Income Tax Rate

The Michigan House is set to deliberate on a significant income tax rollback proposal, which challenges recent judgments by state authorities and courts. This move, championed by House Speaker Matt Hall, aims to alter a temporary tax reduction that was introduced in 2023. The initial cut was heralded as an indicator of Michigan’s robust economic health.

Last year’s tax cut to 4.05% was facilitated by a formula accounting for revenue growth and inflation, as explained by Governor Gretchen Whitmer and Attorney General Dana Nessel. Both officials highlighted the reduction as evidence of the state’s economic strength. Governor Whitmer previously noted, “In total, we have put $1.6 billion in tax relief back in people’s pockets without cutting any critical services or programs.”

Republicans, however, argue that the cut should not have been temporary. They advocate for maintaining the 4.05% rate, opposing its return to 4.25%. Hall emphasizes prioritizing state expenditures to accommodate this tax reduction without expanding the current budget. He stated, “What programs get the best return on investment? We’re going to fund those, we’re going to fund the income tax rollback and we’re going to fund the roads, and then the rest of the stuff is not going to make the cut.”

On the other side, Democrats express concerns about the GOP’s plan lacking a clear outline for necessary budget cuts, projected to be around $540 million in the current fiscal year and $700 million for future years. House Finance Committee member Rep. Kelly Breen remarked, “I would like to know the plan. I’m happy to see that it is the first probably honest and sincere effort to put money back into the hands of Michiganders, but the question is, is the juice worth the squeeze?”

The tax rollback proposal was passed by the finance committee without Democratic backing and now awaits a decision by the full House. Should it pass there, it must also gain approval from the Democrat-controlled state Senate and Governor Whitmer to be enacted.

For more detailed information, you can review the full court decisions and the official statements regarding the temporary nature of the 2023 tax cut.