LANSING, Mich. (Feb. 4, 2021) — Sen. Jeff Irwin (D-Ann Arbor) has introduced a bill to reinvigorate the Earned Income Tax Credit (EITC) and provide thousands of low-income Michigan workers with a higher refund or lower taxes on their state tax returns.
Senate Bill 105 would increase the percentage of the federal EITC that Michiganders could claim on their state tax return, from 6% to 20%.
“The Earned Income Tax Credit is a proven tool for lifting working families out of poverty, and the money generated for families goes right back into our local economies,” Sen Irwin said. “When hardworking Michiganders get tax relief, they spend it on child care, car repairs and other everyday expenses.”
Designed to reward work, the EITC depends on a recipient’s income, marital status, and number of children. A worker’s EITC grows with each additional dollar of earnings until reaching the maximum value. This creates an incentive for people to join the labor force and for low-wage workers to increase their work hours.
“Low-income workers are working harder for less, and this tax relief will help struggling families thrive, rather than just survive, during, and after, the COVID-19 pandemic,” added Irwin.
During the 2018 tax year, there were approximately 729,600 claimants who received Michigan’s EITC, with an average credit amount of $150.
Due to the pandemic, the federal government has already made it easier for working families to claim the EITC. A COVID-19 relief package signed into law Dec. 27, 2020 created a special provision for the 2020 tax year, whereby families will be able to choose whether they want to use their 2019 or 2020 earned income to calculate the EITC for their 2020 returns.
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