Income Tax Reduction Moves

Mar 14, 2025

by Liz Gullett

As MLC’s Communications and Social Media Manager, Liz Gullett keeps clients informed and up-to-date on the goings on in Lansing and the Capitol.

The House Finance Committee reported legislation reducing the state income tax rate from 4.25% to 4.05%, effective January 1, 2025.

Key Points:

    • House Bill 4170 was introduced by Representative Kathy Schmaltz (R-Jackson).
    • In 2015, legislation was signed into law by then-Governor Rick Snyder requiring a reduction to the income tax whenever state general fund revenues grow faster than inflation.
    • This provision was triggered in 2023, reducing the tax rate from 4.25% to 4.05% for only one year. Under the proposal, the reduction would be permanent, barring future legislative action.

Fiscal Impact:

    • According to the nonpartisan House Fiscal Agency, revenue would decline by $539.3 million in the current fiscal year.
    • During FY 2025-26, revenue would decline by $713 million.
    • During FY 2026-27 revenue would decline by $727.6 million.

Next Steps:

    • The bill was sent to the House floor for further consideration.

On Thursday, a similar proposal was introduced by Senator Roger Victory (R-Hudsonville). SB 151 would reduce the state’s personal income tax rate from 4.25% to 3.9%. The bill was referred to the Senate Finance, Insurance, and Consumer Protection Committee.

Michigan Legislative Consultants is a bipartisan lobbying firm based in Lansing, Michigan. Our team of lobbyists and procurement specialists provide a wide range of services for some of the most respected companies in America. For more on MLC, visit www.mlcmi.com or connect with us on LinkedIn and Twitter.

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