Majority moves quickly to deliver key priorities, will continue progress on pressing needs of Michiganders  

LANSING, Mich. (Jan. 26, 2023) — The Michigan Senate Democratic Majority voted today to pass Senate Bill 1 to repeal the pension tax and Senate Bill 3 to create the Working Families Tax Credit.  

“Today we’re making good on our promise to bring real solutions to real people,” Senate Majority Leader Winnie Brinks (D-Grand Rapids) said. “By passing the Working Families Tax Credit and repealing the unfair retirement tax on our seniors, we’re helping folks keep more money in their pockets right now. From day one, we’ve said we are a majority for the people, and we’re proud to be delivering on that commitment to our constituents in our first days.” 

SB 1 increases the deduction that senior taxpayers may claim each year, ultimately undoing the punitive and partisan tax on pensions enacted in 2012. Under the bill, senior taxpayers would have the option to exempt 100% of income from public pensions and allow $60,000 for singles and $114,000 for married returns to be deducted from nonpublic pensions or retirement income. Senior taxpayers will also have the option to use the pre-2012 tax system if it is more beneficial to them.


“Taxing retirement income upended decades of hard work and careful planning by Michigan seniors who dedicated their lives to this state,” said Sen. Hertel (D-St. Clair Shores). “My colleagues and I continue to hear stories from Michigan seniors who are having to make hard choices—choices to downsize homes or cut corners medical needs. Our action today restores a broken promise and offers real, immediate and long-awaited security and support for Michigan retirees.”  

The Working Families Tax Credit, SB 3, would increase the state’s match of the federal Earned Income Tax Credit (EITC) from 6 percent to 30 percent. This 30 percent match of the federal EITC would return around $553 million to local economies and small businesses and benefit nearly 750,000 Michigan workers. Combined, SB 1 and SB 3 stand to give almost $1 billion back to Michigan workers and retirees.


“Families are struggling to get by in every county across the state, limiting our kids’ potential and the future of our state. The Working Families Tax Credit passed today puts money in the pockets of working families now—when they need it the most,” said Sen. McDonald Rivet (D-Bay City). “Decades of research indicates that families mostly use the EITC to pay for necessities like food and childcare, repair homes, maintain vehicles that are needed to commute to work, and in some cases, obtain additional education or training to boost their employability and earning power.  That makes today’s action a win for small businesses, local economies, workers and their children.”


These policies are not only providing immediate and targeted support for struggling residents, but doing so through proven, bipartisan and widely embraced policies. Over 230 organizations have signed a letter urging Michigan’s legislative and executive branches to adopt a 30 percent match of the federal EITC, citing it as a “pro-work” policy with immediate impact to boost local purchasing power. And numerous individual retirees, nearly every retirement organization in the state, and many legislative Republicans have opposed the pension tax when it was passed and the subsequent decade that it has existed.