LANSING, Mich. — State Sen. Tonya Schuitmaker co-sponsored legislation that would restore the Michigan personal tax exemption that was lost in the recent federal tax reform.
“This legislation would ensure the state’s personal exemption remains regardless of changes on the federal level,” said Schuitmaker, R-Lawton. “Additionally, the bill increases the personal exemption amount and would put more money in the pockets of taxpayers.”
The federal Tax Cuts and Jobs Act, in addition to lowering income tax rates, included a streamlined exemption process that eliminated the $4,050 personal exemption at the federal level, setting it to zero.
Senate Bill 748 makes necessary changes to maintain the state’s personal exemption and provides an increase in the state personal exemption by $500 to $4,800 by 2021, while remaining tied to inflation.
Michigan’s current state income tax law ties the state’s personal exemptions to the federal number of exemptions. Without a revision to the law, Michigan taxpayers would no longer be able to claim the personal exemptions on their state taxes — which would cost state taxpayers around $1.5 billion a year.
“Not only does this plan ensure Michigan residents are able to keep this much-needed exemption, it also includes an increase in the personal exemption to $4,800 — going above and beyond the $4,500 recommendation of Gov. Rick Snyder,” Schuitmaker said.
Currently, the state’s personal tax exemption is scheduled to increase from $4,000 to $4,300 over the next three years.
“There has been a lot of uncertainty regarding the federal changes and what they might mean for Michigan residents,” Schuitmaker said. “Now that our budget has begun to stabilize and we’ve approved numerous reforms that have drastically improved the state’s financial outlook, it is time to give relief to families throughout my district and our state.”
According to Senate Finance Committee Chairman Jack Brandenburg, the sponsor of SB 748, the committee will hold a hearing on the bill on Tuesday, Jan. 16.