A new bill introduced in the Michigan House of Representatives would lower the state’s income tax rate by a fraction of a percent, from 4.25% to 4.05%.
It’s a callback to a couple years ago. That’s when strong state revenue triggered a law that temporarily lowered the tax rate in 2023.
A coalition that included some Republican lawmakers unsuccessfully fought in court for that cut to be permanent. They called the decision to have the tax rate rebound a raise.
Now, the bill from Representative Kathy Schmaltz (R-Jackson) would bring that cut back.
“Everybody's hurting right now. Everybody's struggling. And what we need to do is really make life more affordable for people. And raising income taxes was not the right thing to do. And it should have stayed permanent,” Schmaltz said.
According to U.S. Census data, Michigan’s median household income was around $71,000 in 2023, the most recent year available. That would mean lowering the tax rate to 4.05% could result in about a $142 annual tax cut for families at that median level.
The bill would likely face an uphill battle in the Democratically-controlled Michigan Senate, should it make it out of the House.
Democratic Governor Gretchen Whitmer could be another potential obstacle as well.
Last month, Whitmer unveiled her road funding plan. In it, she called for raising new streams of revenue albeit largely from big businesses.
Her office did not provide a comment on the plan to lower the state’s income tax rate Wednesday.
Schmaltz, however, said she doesn’t think that’s the way to go. Rather than support finding new revenue opportunities, House Republicans have been promoting tactics they say will cut wasteful spending from the state budget.
“Here at the state, we have spent money on things that we don't need to spend money on,” Schmaltz said.
Her bill has been referred to the House Finance Committee.
