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Legislation to Lower Tax Rate from 4.25% to 4.05% Moves to Senate
The Michigan House of Representatives has approved a bill to reduce the state’s income tax rate from 4.25% to 4.05% starting January 1, 2025. The move, backed by Republican lawmakers, is being framed as a way to provide financial relief for Michigan families, while many Democrats argue it primarily benefits higher-income earners.
House Bill 4170: A Step Toward Permanent Tax Cuts
The bill, sponsored by Rep. Kathy Schmaltz, R-Jackson, aims to make tax relief permanent by amending Michigan’s tax law. A provision in the law previously triggered a temporary tax cut in 2023, but it returned to 4.25% in 2024 after a court battle. The new legislation would ensure that any future tax cuts triggered by revenue surpluses become permanent.
“This is about helping families who are struggling with rising costs,” Schmaltz said. “Every little bit helps.”
Support and Opposition Split Along Party Lines
The bill passed with unanimous Republican support, while most Democrats opposed it, though seven Democratic lawmakers crossed party lines to vote in favor.
Critics argue that Michigan’s flat income tax structure means the wealthiest will receive the most significant benefit. Rep. Morgan Foreman, D-Pittsfield Township, called it “a wolf in sheep’s clothing, while those making less than $27,000 per year would see an average tax reduction of just $11.
Rep. Jasper Martus, D-Flushing, added, “If we want real relief, we should ask the wealthy to pay more so that everyone else can pay less.”
Projected Impact on Michigan’s Budget
According to the House Fiscal Agency, the tax cut would result in:
- A $539.3 million revenue reduction for fiscal year 2025
- A $713 million cut for fiscal year 2026
- A $727.6 million cut for fiscal year 2027
Michigan’s income tax revenues help fund schools, roads, and public services, and the Michigan Department of Treasury has voiced opposition to the measure.
Next Steps: Senate Consideration
The bill now moves to the Democratic-led Michigan Senate, where it faces an uncertain future. Meanwhile, some Democratic lawmakers are pushing for alternative financial relief measures, including a child tax credit and expanded cash assistance for new parents.
“For too many families, raising a child has become financially overwhelming,” said Sen. Mallory McMorrow, D-Royal Oak, emphasizing the need for policies that prioritize working-class families.
As the debate continues, Michigan’s tax policy remains at the center of a broader political battle over economic priorities and income equity.
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