On Monday, Governor Rick Snyder announced that he is asking the state legislature to take swift action on a state income tax exemption issue. After recent federal tax reforms effectively eliminated the personal exemption at the state level, the Governor and Lt. Governor Brian Calley developed a proposal to restore the exemption. “The exemption on state tax return forms is tied to the federal exemption. Since the federal government reduced the rate to zero, that would make the state exemption also zero. To restore the exemption on the state level, the legislature will need to pass legislation to ensure the exemption remains,” explained Matt Sowash of MLC.
Over the holiday season the Governor and Lt. Governor worked with the Department of Treasury to analyze the federal reform and the effects it will have on state income taxes. According to the Governor’s office, the loss of the personal exemption at the state level will cost Michigan residents $1.15 billion annually in the form of a tax increase.
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