Michigan House Bill HB4313

Michigan 2025-2026 Regular Session

• Introduced: 4/16/25
• Refer: 4/16/25

Caption

Individual income tax: deductions; deduction for residents in a district with a vacant legislative seat; provide for. Amends sec. 30 of 1967 PA 281 (MCL 206.30).

Impact

The implications of HB 4313 are substantial for state revenue as it alters the tax base by allowing deductions that were previously more restricted. This change is likely to provide financial relief to many retired public employees and enhance the appeal of working in governmental positions by making retirement benefits more advantageous from a tax perspective. However, it could also mean reduced revenue for the state, prompting concerns regarding budget allocations and funding for public services in the coming years.

Summary

House Bill 4313 is aimed at amending the Income Tax Act of 1967, specifically focusing on the deductions available to taxpayers regarding retirement and pension benefits. It proposes that residents born after certain dates be allowed to deduct a progressively larger percentage of retirement income from taxable income, ranging from 25% to 100% over the years 2023 to 2026. This initiative targets public police, fire department employees, state police, and corrections officers among others, allowing them to deduct their retirement benefits without certain limitations after a specified date. The bill is seen as a significant revision to how retirement income is treated under state tax law.

Contention

Controversy surrounding the bill hinges on its potential impact on state finances and the fairness of such tax breaks. Advocates argue that it supports those who served public roles, providing equitable tax treatment that reflects their contributions. Conversely, opponents risk highlighting the cascading effects on state budgets, arguing that such deductions may create imbalance and strain public resources. Critics may contend that the focus on specific groups of retirees may diverge attention from broader tax reform needs.

Additional_points

Moreover, there are implications for residents residing in districts with vacant legislative seats, as the bill allows them certain deductions based on their income during such vacancies. This particular change aims to address disparities that arise due to legislative representation gaps, making tax burdens lighter for affected constituents. Such inclusivity is debated, with some lawmakers questioning the need for special considerations in tax deductions that focus on geographic representation.