Michigan House Bill HB4531

Michigan 2023-2024 Regular Session

• Introduced: 5/9/23
• Refer: 5/9/23
• Report Pass: 9/13/23

Caption

Individual income tax: credit; credit for donations to endowment fund of community foundations; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 261. TIE BAR WITH: HB 4530'23

Impact

The passage of HB 4531 has the potential to significantly impact state laws governing individual income tax liabilities. By incentivizing contributions to community foundations, the bill may increase funding for local initiatives that benefit communities throughout Michigan. The requirement for gift acknowledgment by the community foundation ensures that contributions are verifiable and can be accounted for in tax credits claimed. This could lead to a more engaged citizenry in philanthropy as individuals are motivated to support local causes financially, thus enhancing community development and welfare.

Summary

House Bill 4531 is designed to amend the Income Tax Act of 1967 in Michigan, specifically introducing a new section that provides tax credits for individuals who make contributions to community foundation endowment funds. Beginning January 1, 2023, taxpayers can claim a credit equal to 50% of their contributions, with specific limits based on their filing status and the type of taxpayer. For individual taxpayers, the maximum credit is capped at $100, and for joint filers, it can go up to $200. For resident estates or trusts, the credit is limited to 10% of their tax liability or $5,000, whichever is less. This amendment aims to encourage charitable giving and support community foundations across the state.

Contention

Despite its potential benefits, HB 4531 also presents points of contention regarding the implications for state revenue and the prioritization of fiscal incentives. Critics may argue that the tax credits could diminish state tax revenue, raising concerns over how such a fiscal approach aligns with broader state budgetary needs. Furthermore, there may be discussions around whether philanthropic giving should be incentivized at the state level and the extent to which tax credits like these could favor certain organizations over others, potentially leading to unequal funding opportunities among community foundations. The bill ties its enactment to the passage of House Bill 4530, raising additional questions about legislative strategy and potential negotiations involved in its acceptance.