On Tuesday, the Senate unanimously voted to approve a package of bills providing tax credits to many residents. The two bills passed this week are companion bills to legislation the Senate passed last week increasing the personal exemption on income taxes to $5,000 by 2021. The legislation passed this week would create a $500 income tax credit for dependent care, mirroring the one offered at the federal level. A qualifying dependent is defined as a dependent child twelve-years or younger, or a grown child, spouse, or elderly parent who is physically or mentally unable to care for themselves. Additionally, the legislation allows for personal exemptions to be claimed at the local level. The three bills in the package have all been referred to the House Tax Policy Committee for consideration.
The House also has a package of bills dealing with the personal exemption on income taxes, however their version is different from the Senate proposal. In the House plan, the state personal exemption would increase from the current $4,000 to $4,800 by 2020. Additionally, it provides a tax credit for residents sixty-two and older; $100 for single filers and $200 for joint filers. Like the Senate proposal, the House also allows for taxpayers to claim the exemption on city income taxes. The three-bill package was reported by the House Tax Policy Committee on Wednesday and on Thursday the chamber passed the bill package. The bills will be sent to the Senate for consideration.
“Ultimately, the two chambers will need to find a compromise if they wish to send a proposal to Governor Snyder. Additionally, they will need to work with the governor, who supports preserving the personal exemption but has expressed his desire to keep any increases to a maximum of $4,500 and most recently called for fiscal restraint during the State of the State address,” stated Rudy Hobbs of MLC.
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