McDonald Rivet’s Working Families Tax Credit, Hertel repeal of retirement tax to benefit 1.2M Michiganders
LANSING, Mich. (Feb. 28, 2023) — Today, Senate Democrats finalized the biggest tax relief initiative Michigan has seen in decades, sending the Lowering MI Costs Plan on to Gov. Gretchen Whitmer for her signature into law. The bill will overhaul the unfair and unpopular retirement tax, expand the Working Families Tax Credit, and make significant investments in housing and community development.
“Today, we are sending the governor the biggest, broadest tax relief plan Michiganders have seen in decades,” Senate Majority Leader Winnie Brinks (D-Grand Rapids) said. “This has the power to make a generational impact on the financial wellbeing of individuals and families in our state. With less than two months in the majority under our belts, Democrats are already delivering on our long-held promises to help household budgets stretch further.”
A key component of the bill will expand the Working Families Tax Credit to 30% of the federal Earned Income Tax Credit. 700,000 Michiganders—those who have the hardest time affording the basics—will see an average of $3,150 dollars back in their pockets. This proposal was spearheaded by Sen. Kristen McDonald Rivet (D-Bay City) and has the backing of a coalition of 230 business groups, economic development organizations, health care and hospitality entities, faith organizations and more from across the state.
“The Working Families Tax Credit is a proven, bipartisan tool to lift working families out of poverty and has widespread cross-sector support,” said Sen. McDonald Rivet. “The policy’s effectiveness, track record, and nearly universal endorsement make it the perfect policy to address the needs of struggling Michiganders to counter inflation and to bolster small businesses still grappling with job vacancies.”
Lowering MI Costs phases out the unfair and unpopular retirement tax over four years and ultimately puts an average of $1,000 back in the pockets of 500,000 households. Ending the tax on retirees created by Gov. Rick Snyder has been a top priority for Democrats for more than 10 years. The plan, led by Sen. Kevin Hertel (D-St. Clair Shores) in the Senate, equalizes the exemption on both public and private retirement income.
“The retirement tax has robbed Michigan seniors of their promised retirement benefits for more than a decade—eliminating it has been a top priority of mine since I began serving in the Legislature,” said Sen. Hertel. “Lowering MI Costs will provide targeted and equitable relief for retirees, and I am proud to be a part of restoring the broken promise of a safe, secure and happy retirement.”
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.
“From our kids to our seniors and everyone in between, this plan will have a major impact on our state,” said Sen. Mallory McMorrow (D-Royal Oak). “This historic legislation tackles longstanding Democratic policies to provide significant support to our fellow Michiganders who need it the most. Lowering MI Costs also makes key investments in housing, parks, community spaces and other pieces of a holistic, reenvisioned approach to economic development.”