Michigan House Bill HB4862

Michigan 2023-2024 Regular Session

• Introduced: 6/28/23
• Refer: 6/28/23

Caption

Cities: income tax; taxing income of nonresidents; prohibit. Amends secs. 2a, 3, 3a, 3b & 3c, ch. 1 & secs. 11, 13, 15, 16 & 51, ch. 2 of 1964 PA 284 (MCL 141.502a et seq.).

Impact

The bill specifically modifies sections relating to the excise tax structure, changing the landscape of local taxation in Michigan. It reduces the financial liability of nonresidents toward cities where they may work frequently, but it places a burden on cities that traditionally relied on these taxes to fund local initiatives and services. The expected result could lead to cities re-evaluating their tax structures or finding alternate revenue sources in light of this adjustment.

Summary

House Bill 4862 amends the 'City Income Tax Act' of 1964 to address the taxation of nonresidents starting January 1, 2024. The bill prohibits cities from imposing an excise income tax on nonresident individuals, which means that if enacted, nonresidents working in a city will no longer be subject to local income taxes. This change is significant as it impacts cities' abilities to generate revenue from individuals who earn income within their jurisdictions but do not reside there, potentially affecting city funds for public services.

Contention

There are likely to be points of contention surrounding this bill. Supporters argue it will relieve nonresidents from unfair taxation, as many pay taxes to their resident cities. However, opponents may be concerned about the fiscal consequences for city budgets, fearing this could hinder local governments' ability to provide critical services. The contrasting views on the necessity of local taxation versus fair treatment of nonresident workers will be focal in discussions surrounding HB4862.