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.
