Jan. 26th action on SB 1 and SB 3 stand to give almost $1 billion back to Michiganders
LANSING, Mich. (Jan. 31, 2023) — Sen. Dayna Polehanki (D-Livonia) joined the Senate in passing Senate Bill 1 and Senate Bill 3 last week. SB 1, which would provide much-needed tax relief to seniors, and SB 3, which would increase the state’s match of the federal earned income tax credit from 6 percent to 30 percent, put hard-earned money back into the pockets of Michiganders across the state.
“For years, Michigan seniors have struggled to pay for a surprise tax hike and had the promise of a secure retirement broken by the leaders they trusted,” said Sen. Polehanki. “This bill enables more seniors to live, work, and retire with dignity in this state.”
SB 1 would repeal the unpopular retirement tax, allowing senior citizens in Michigan to use their money saved for retirement without being taxed. The legislation increases the deduction that senior taxpayers may claim each year, ultimately undoing the punitive and partisan tax on pensions enacted in 2012. Senior taxpayers will also have the option to use the pre-2012 tax system if it is more beneficial to them.
“Even before the pandemic, nearly half of the households in our state were unable to pay for basic needs like housing, food, childcare, and transportation, and many of our fellow Michiganders are still struggling today,” added Sen. Polehanki. “By expanding the Working Families Tax Credit, we are giving more money directly back to the hardworking residents who need it most and offering them some concrete, immediate relief from inflation and the most pressing expenses in their daily lives.”
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. Additionally, it contains a provision that makes this increase retroactive to the 2022 tax year, which would give working families the ability to take this credit in this year’s tax filing.
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.