Senate Democrats Secure $1 Billion in Tax Relief
Rising costs are making it harder for families to put food on the table and fill up their gas tank. To help support Michiganders facing economic challenges, Senate Democrats passed the Lowering MI Costs Plan in 2023 — the largest tax relief initiative in Michigan history, which cut taxes by $1 billion for folks who need it most. This plan repealed the unfair retirement tax and expanded tax credits for working families, while also investing millions of dollars in housing and revitalization grants to help make Michigan a place people are proud to call home.
Take Advantage of the Largest Tax Break for Working Families in Michigan History
Historic expansion of the Earned Income Tax Credit saves families thousands of dollars a year
Senate Democrats have been focused on cutting taxes and making it easier for folks to raise their family here in Michigan. That’s why we worked to deliver the biggest tax break for working families in Michigan history. During the last legislative session, we quintupled Michigan’s match of the Earned Income Tax Credit (EITC) from 6% to 30% to help families save an average of $3,800 when combined with the federal credit.
What is it? The Michigan Earned Income Tax Credit (EITC) is a tax benefit for working individuals with income below a certain level.
What benefits does it provide? It reduces the taxes you owe, putting more money in your pocket! Even if you do not owe taxes, it could result in a refund. This extra income can help you care for your family, meet living expenses, or save for the future.
Who qualifies? To qualify for the Michigan EITC, you must qualify for the federal EITC. You can verify your eligibility here.
How can I claim it? Verify your federal EITC eligibility, file your federal income tax return with the IRS and claim the federal EITC, then file the Michigan individual income tax return and claim the Michigan EITC. For more information, click here.
You can check your eligibility and claim your EITC online at IRS.gov.
Learn How the Retirement Tax Rollback Can Help You Save During Your Golden Years
By repealing the retirement tax, we’re helping Michigan retirees save up to $1,000 more a year
Michigan’s retirement tax robbed seniors of their promised retirement benefits for more than a decade. That’s why we led the effort to repeal this unfair tax, which will help nearly 500,000 seniors save $1,000 annually — enabling them to enjoy a safe, secure, and happy retirement.
Until the full repeal takes effect in 2026, you have multiple options to choose from when it comes to your retirement benefits. You may wish to consult a qualified tax preparer to ensure you can deduct the maximum amount of retirement benefits. For more information, visit Michigan.gov/taxes.
A First Step to Lowering Housing Costs While Building Up Michigan Communities
Strategic investments in housing and revitalization grants are helping more families make it in Michigan
The Lowering MI Costs Plan also invested $50 million of surplus revenue in sustainable and dedicated funding to accessible housing to help veterans, seniors, people with disabilities, and working families find a place to call home.
The legislation also provided $50 million for Revitalization and Placemaking grants to turn underutilized office, commercial, and community spaces into places for people to enjoy, including affordable housing, parks, outdoor dining spaces, community gathering places, and more.
How the 2026 State Budget Helps You Keep More of Your Hard-Earned Money
As part of our bipartisan 2026 state budget, we eliminated state taxes on tips, overtime, and Social Security, so you can keep more of your hard-earned paycheck.
What does this look like in action?
- No taxes on tips will save up to 300,000 Michiganders an average of $400/year on their state taxes.
- No taxes on overtime will save up to 500,000 workers an average of $500/year on their state taxes.
- No taxes on Social Security will save up to 40,000 eligible seniors $500/year on their state taxes.
Additional Resources to Help You Save
AVOID SCAMS
For federal returns, the IRS will only initiate contact with you through regular mail delivered by the U.S. Postal Service. Do not share your personal tax information via phone, email, or social media. Learn more here.
UTILIZE FREE RESOURCES
Michigan Free Tax Help connects Michiganders with free, high-quality income tax preparation assistance. Visit MichiganFreeTaxHelp.org to find local help.
TAKE ADVANTAGE OF AVAILABLE DEDUCTIONS
You can deduct charitable contributions, property taxes, medical expenses and more from your federal 2025 taxes. Find a full list of deductions here.