Michigan House Bill HB5731

Michigan 2023-2024 Regular Session

• Introduced: 5/15/24
• Refer: 5/15/24

Caption

Individual income tax: credit; working parent credit; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 272a.

Impact

The introduction of this bill is projected to have a significant impact on state revenue and tax policy. It encourages support for working families by directly tying tax benefits to the number of dependents, particularly young children. The bill limits the credit to three dependents per taxpayer per year, which will help in managing the overall fiscal implications. Additionally, if the tax credit exceeds the taxpayer's liability, the excess amount will be refunded, ensuring that low-to-moderate income families accessing this credit will not be at a financial disadvantage.

Summary

House Bill 5731 is designed to amend the Income Tax Act of 1967, specifically by adding section 272a. The bill proposes a tax credit for qualified taxpayers, effective for tax years beginning on or after January 1, 2024. Qualified taxpayers can claim a $5,000 credit for each dependent aged three years or younger and a $2,500 credit for dependents aged between three and six years, provided the relevant exemptions are claimed. This initiative aims to alleviate the tax burden on families with young children, signifying a financial incentive for parents in particular.

Contention

While the bill appears to offer substantial benefits to families, it may also raise concerns regarding its potential impact on state finances. Opponents could argue about the risk of decreased tax revenues, which could affect funding for essential public services. Moreover, there might be discussions around the eligibility criteria, particularly the minimum earned income requirement set at $10,000, which could exclude some lower-income families from receiving this benefit. Thus, deliberations surrounding the redistribution of tax burdens in the state might arise during legislative discussions.