Michigan House Passes Income Tax Cut Proposal

The Michigan House of Representatives has passed House Bill 4170, proposing a reduction of the state income tax rate from 4.25% to 4.05%, retroactive to January 2025. This follows a temporary reduction in 2023 due to surplus revenue exceeding inflation, later deemed temporary by the Attorney General. The bill, sponsored by Rep. Kathy Schmaltz, aims to make this reduction permanent, potentially saving taxpayers $700 million annually. While proponents argue it provides necessary financial relief amid rising living costs, critics, including some Democrats, argue that the benefits disproportionately favor higher-income individuals. The bill now moves to the Senate, where its fate remains uncertain in the Democratic-led chamber. It is unclear whether Governor Gretchen Whitmer will support the legislation if it reaches her desk.