On Tuesday afternoon the Governor, Senate Majority Leader and House Speaker announced an agreement had been reached on tax portion of the budget.
Below are the details.
Michigan Business Tax:
Repeal the MBT – still honoring commitments to those with “certificated” credits.
Individual Income Tax Rate will be frozen at 4.35% and roll-back to 4.25% on 1/1/13.
Corporate income Tax of 6% on C-Corp Businesses.
Flow-through entities will continue to pay Individual Income Tax (4.35% until phase-down to 4.25%)
Retirement/Pension Tax Changes:
Seniors/Retirees over 67 years of age as of January 1, 2012 will NOT lose their exemptions on pensions and other retirement income (grandfathered)
People 60-66 years of age as of January 1, 2012 will receive an exemption for all Social Security income PLUS a $20,000 for single filers or $40,000 for joint filers retirement income exemption (Retirement income includes public pensions, private pensions, 401ks, IRAs). When people born between Jan. 1, 1946 and Dec. 31, 1952 turn 67, they’d qualify for a senior income exemption of $20,000 for a single filer and $40,000 for joint filers, regardless of income source.
People 59 years of age and under as of January 1, 2012 will be part of the new program. When this group turns 67 years old they will receive a $20,000 single filer or $40,000 joint filer special senior exemption against all types of income. This is regardless of income source and can be taken instead of the Social Security and personal exemptions if it would result in more generous tax treatment to the individual.
Homestead Property Tax Changes:
The Homestead Property Tax Credit will go from 60% to 100% for people with household incomes between $0-$20,000
For household incomes between $20,001 – $30,000, the Homestead Property Tax Credit will be phased down from 100% to 60%
For household incomes greater than $30,000, the Homestead Property Tax Credit would be 60%
The credit for persons with disabilities would remain at 100%
The maximum credit would remain at $1,200 and would be phased out for income between $41,000-$50,000
Contact your State legislator using This link and let them know you support this plan and want to see Michigan move forward.