Michigan Senate Bill SB0091

Michigan 2025-2026 Regular Session

• Introduced: 2/19/25
• Refer: 2/19/25

Caption

Individual income tax: deductions; exclusion of certain gratuities for tipped employees; provide for. Amends sec. 30 of 1967 PA 281 (MCL 206.30).

Impact

The bill changes the definition of taxable income for individuals and introduces specific provisions that directly affect the deductions available to retirees, particularly those receiving pension or retirement benefits from government employment not covered by Social Security. The adjustments also clarify how different income types, such as income derived from governmental obligations, factor into taxable income, aiming to simplify the tax code while providing fairer treatment for various income groups.

Summary

Senate Bill No. 91 (SB0091) seeks to amend the Income Tax Act of 1967 to provide certain exemptions and adjustments to taxable income calculations in Michigan. One of the primary adjustments proposed is related to tipped employees, allowing them to deduct proven gratuities received from customers, aligning state tax laws with the realities of income received in service-oriented jobs. This amendment is aimed at ensuring that tipped employees aren't disadvantaged in the tax calculation process due to the volatile nature of gratuities.

Contention

Notably, one significant aspect of contention surrounding SB0091 may stem from the proposed provisions allowing for deductions for gratuities. This could be met with mixed reactions as supporters argue it is necessary for equitable taxation of service workers, while critics might express concerns over potential revenue impacts for the state or questions about enforcement and verification of gratuity declarations by employees. Additionally, the treatment of retirement benefits could also lead to debates about fairness among taxpayers of differing age groups and income levels, particularly those trying to balance taxes on limited retirement resources.