Individual income tax: credit; working parent credit; provide for. Amends 1967 PA 281 (MCL 206.1 - 206.847) by adding sec. 272a.
If enacted, HB5640 will directly impact the financial landscape for working parents in Michigan by reducing their state income tax liability. The introduction of such a credit reflects a shift toward recognizing the economic pressures faced by families with dependents. The implementation of this credit is expected to increase disposable income for eligible families, thereby potentially stimulating local economies through increased spending. Furthermore, the bill mandates a systematic approach for the disbursement of these credits, as the state revenue department will establish a monthly payment mechanism for the advance refunds, aiming for convenience and efficiency in the process.
House Bill 5640 proposes an amendment to the Income Tax Act of 1967 by adding a new section that allows qualified taxpayers to claim a tax credit for each qualified dependent under three years of age. The credit is set at $5,500 for these dependents and is aimed at providing financial relief to working parents. The bill specifies that these credits can be adjusted for any advance refund payments made during the tax year, ensuring that taxpayers are not compensated twice for the same dependent. This is seen as a measure to alleviate the tax burden for families with young children, promoting financial stability for those in the workforce.
While the bill has garnered support for its intent to assist low- and middle-income families, there may be points of contention regarding the fiscal implications of such tax credits. Critics could argue that the financial support provided through tax credits could lead to decreased state revenues, thereby affecting public funding for other essential services. Additionally, the eligibility criteria for 'qualified taxpayers' and 'qualified dependents' may raise discussions about who is most benefitted by the bill. Overall, the debate could center around the balance between providing necessary tax relief and maintaining sufficient funding for state programs.