Michigan Senate Bill SB0051

Michigan 2023-2024 Regular Session

• Introduced: 2/1/23
• Refer: 2/1/23

Caption

Individual income tax: exemptions; increasing personal exemption, reducing income tax rate, lowering age for unrestricted deduction, and increasing deduction for certain retirement or pension benefits; provide for. Amends secs. 30 & 51 of 1967 PA 281 (MCL 206.30 & 206.51).

Impact

Should this bill pass, it would significantly alter how retirement income is taxed, allowing for higher deductions and making it easier for older adults and retirees to manage their taxable income. The amendments would not only raise the personal exemption allowed per taxpayer but would also enhance the deductions available for income derived from retirement plans. By doing so, SB 0051 aims to provide greater financial relief to Michigan residents, especially those aged 65 and older, making the tax code more favorable towards these individuals.

Summary

Senate Bill 0051 proposes amendments to the Income Tax Act of 1967 by increasing the personal exemption, reducing the income tax rate, and lowering the age at which taxpayers can claim an unrestricted deduction for certain retirement or pension benefits. The bill also aims to provide deductions for specific exemptions related to taxation, making adjustments to improve the financial benefits for retirees and non-residents. The changes brought forth by this bill reflect a focus on supporting individuals who rely on pension benefits.

Contention

Despite the potential benefits, there may be points of contention regarding the fiscal implications of these changes. Critics may raise concerns about the reduction in state revenue due to increased exemptions and lower tax rates, which could lead to budgetary constraints for state-funded programs. Additionally, the bill's retroactive application to tax years beginning on or after January 1, 2023, might also spark debate among legislators focused on tax fairness and revenue stability. Advocates of the bill argue it promotes economic security for retirees, whereas opponents may question its impact on state funding and the overall equity of the tax system.