LANSING, Mich. — State Sen. Mike Nofs voted to pass legislation Wednesday that would preserve the Michigan personal exemption for state income tax and raise the exemption by $700 over three years.
This would allow taxpayers to keep more for themselves at tax time and not have to send it to Lansing.
Senate Bill 748 would make changes to Michigan tax law to retain the state personal exemption and also boost the exemption from $4,300 to $5,000 by 2021. Currently, the state personal exemption is scheduled to increase from $4,000 to $4,300 over the next three years.
“I’m glad we were able to fix a potentially serious problem for our taxpayers,” said Nofs, R-Battle Creek. “The federal tax cuts were a good break for the average American. It’s not the fed’s fault that Michigan’s tax math is based on their number. This is a smart fix and a good opportunity to give Michiganders some much-deserved tax relief.”
Michigan’s current state income tax law ties state personal exemptions to the federal number of exemptions. The federal Tax Cuts and Jobs Act signed by President Trump in December 2017 simplifies the code, lowers tax rates, doubles the standard deduction and increases family tax credits. However, in streamlining the exemption process, it effectively ends the federal personal exemption. Without a revision to the law, Michigan taxpayers would no longer be able to claim the personal exemptions on their state taxes.
SB 748 now heads to the House for further consideration.
In a busy day of legislative action, Nofs also voted in support of a veto override of SBs 94 and 95 that will speed up the reduction of a tax on used vehicle trade-ins. Otherwise buyers would have seen their state taxes go up when buying a new car.
“Taxes are not what Michigan drivers want to think about when trading in a car,” Nofs said. “These bills help both the drivers who want to trade up and the businesses who want to stay competitive with out-of-state dealers. I’m pleased to see bipartisan support for this veto.”