Plan signed this week creates Working Families Tax Credit, phases out retirement tax, invests in housing and community development
LANSING, Mich. (March 10, 2023) — This week, Sen. Veronica Klinefelt (D-Eastpointe) and Gov. Gretchen Whitmer celebrated the signature into law of the Lowering MI Costs Plan, House Bill 4001. The Lowering MI Costs plan rolls back the retirement tax, putting $1,000 back in the pockets of 500,000 households, and quintuples the Working Families Tax Credit, delivering an average combined tax refund of $3,150 to 700,000 families, directly benefiting nearly one million kids—almost half the kids in Michigan.
“I was proud to vote in favor of Lowering MI Costs. Making sure that our seniors are taken care of is a top priority of mine and repealing the retirement tax is a step in the right direction,” said Sen. Klinefelt. “Along with increasing the Working Families Tax Credit to 30 percent, this law will go far in making sure we are putting money back in the pockets of hardworking Michiganders.”
“Right now, families are facing the pinch and having tough conversations about how to make ends meet,” said Gov. Whitmer. “I am proud to sign a $1 billion tax cut for seniors and working families. Getting this done will help people pay the bills, put food on the table, and afford essentials like groceries and school supplies. It will ensure seniors can keep more of what they’ve earned over a lifetime of hard work and put money back in the pockets of 700,000 working families. I will continue to work with our legislative partners to build on this progress, grow our economy, and lower costs for every Michigander.”
A key component of the bill will expand the Working Families Tax Credit to 30 percent of the federal Earned Income Tax Credit. The credit has the support of a coalition of 230 business groups, economic development organizations, health care and hospitality entities, faith organizations and more, including the Macomb County Chamber of Commerce, United Way for Southeastern Michigan, Macomb Community College, Macomb County Community Mental Health, Macomb County Office of Senior Services, and Macomb County Veteran Services.
Data compiled by the Michigan League for Public Policy shows that 21,288 households in Senate District 11 received the EITC in 2019. With the Working Families Tax Credit, local recipients will receive around $615 more, benefiting 28,298 kids and raising 843 families out of poverty.
Lowering MI Costs phases out the retirement tax over four years and ultimately puts an average of $1,000 back in the pockets of half a million households. The plan equalizes the exemption on both public and private retirement income. According to 2019 U.S. Census Bureau data, in Macomb County, a total of 102,234 households received retirement income averaging $21,982 annually. In Wayne County, 184,844 households saw an average of $23,897 per year in retirement income.
The Lowering MI Costs Plan also invests $50 million of surplus tax revenue in the state’s Housing and Community Development fund, which prioritizes projects offering veterans, seniors, people with disabilities, and working families safe, affordable places to call home. This is significant, sustainable and ongoing dedicated funding to affordable housing. The plan also provides $50 million for Revitalization and Placemaking (RAP) grants to turn underutilized office, commercial, or community space into places for people to enjoy, including affordable housing, parks, outdoor dining spaces, community gathering places, and more.