Michigan Democrats’ Working Families Tax Credit taking effect on Feb. 13 quintuples state EITC, stands to help save around 700,000 Michiganders around $3,150 a year
LANSING, Mich. (Jan. 26, 2024) — On EITC Awareness Day today, Michigan Senate Democrats are celebrating their passage of the most significant increase to the credit in state history. To help alleviate financial hardship for families, Senate Democrats created the Working Families Tax Credit — quintupling Michigan’s match of the federal Earned Income Tax Credit (EITC) from 6% to 30%.
The Working Families Tax Credit was part of the Lowering MI Costs Plan — the biggest tax relief initiative Michigan has seen in decades — that Senate Democrats finalized last March. The plan also overhauled the unfair and unpopular retirement tax. The proposal was designed to combat rising costs, high fuel prices and supply chain issues and help more Michigan families and seniors save money.
“From the very beginning of our Majority for the People, we have been dedicated to making it easier to raise a family, promoting safe and thriving neighborhoods, helping folks earn a decent paycheck while keeping more of it in their pocket at the end of the month,” said Senate Majority Leader Winnie Brinks (D-Grand Rapids).
This expansion will help 700,000 Michiganders who have the hardest time affording the basics save an average of $750 more per year, resulting in $3,150 in total savings with the federal and state EITCs combined. The increased credit takes effect on February 13, 2024. The Michigan Department of Treasury encourages residents to stay up to date and verify their eligibility at Michigan.gov/taxes.
In addition to claiming it this tax season, the expanded Michigan EITC is also retroactive to the 2022 tax year (last tax season). Federally eligible individuals who claimed the Michigan EITC on their 2022 taxes received the original 6% credit. After the expansion takes effect, the Michigan Department of Treasury will begin to issue supplemental check payments to provide eligible taxpayers with the remaining 24% portion of the credit.
“We celebrate EITC Awareness Day every year, but today it’s a particularly big celebration because of last year’s boost to the state credit,” said Monique Stanton, President and CEO of the Michigan League for Public Policy. “Thanks to years of collaborative efforts and legislative champions like Sen. Kristen McDonald Rivet and Sen. Jeff Irwin, over half a million Michiganders with low incomes will see an average of $750 back in their pockets this year to pay for essentials like groceries, gas and child care. But we need to raise awareness about the credit for it to have greatest impact, so we’re encouraging folks to spread the word in their communities. The power of the EITC is strong, and so is the coalition of advocates, organizations and lawmakers who are continuing to build on that power to make the credit expanded even further in the future.”
It is estimated that the Working Families Tax Credit will contribute around $553 million to local economies and small businesses, as the EITC is often spent on necessities like child care, car repairs, new appliances, groceries and more. Increasing the state EITC is a two-generation policy that helps kids by helping their parents, and it has been proven to have myriad positive benefits on kids.
Bipartisan since its inception, the federal EITC was created by Republican former President Gerald R. Ford and a Democratic Congress. The Michigan EITC was established by a Republican-led Legislature in 2006 and signed into law by then-Gov. Jennifer Granholm, a Democrat. Over the years, the EITC has been touted by Republicans and Democrats alike, including former President Ronald Reagan, Republican former U.S. House Speaker Paul Ryan, and Democratic former presidents Jimmy Carter and Barack Obama.
Last year, nearly 230 organizations signed a letter urging Michigan leaders to adopt a 30% match of the federal EITC, citing it as a “pro-work” policy with immediate impact to boost local purchasing power. This included: business groups like the Michigan Chamber of Commerce and various local chambers of commerce, the Small Business Association, Business Leaders for Michigan; the Michigan League for Public Policy and other advocacy groups; the Michigan Association of United Ways, local United Ways around the state and other human services organizations; and more.
If Michigan residents meet EITC income requirements, they can qualify for free tax help. Residents can call 1-800-906-9887 or visit IRS.gov/vita to find IRS-trained volunteers for free tax return preparation. Eligible Michigan residents across the state can also call 2-1-1 on any phone or visit MichiganFreeTaxHelp.org to connect with a free tax preparation expert who can help them claim all the tax credits available, at no cost, ever.
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