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  Changes in Michigan Tax Laws, 1997 Through August 2005
   
Income Taxes

Personal Income Tax
1997 PA 81: Establishes child tax deduction. Although described as a credit in the legislation, it actually provides additional exemptions from taxable income equal to $600 for children under seven years of age and $300 for children between seven and 12 years of age. At the 1998 income tax rate of 4.4%, the credit amount are $26.40 and $13.20. They will decline as the income tax rate declines in the future (see PAs 2 through 6 of 1999).
  PA 82: Increases tuition tax credit to 8%, up to a maximum of $375 per year.
  PA 86: Increases personal exemption by $200.
1998 PA 19: Makes the returned income credit apply to the 1989 income tax year and each year thereafter (instead of beginning with the 1991 tax year). The returned income credit is for an amount equal to taxes paid in a prior year on income that was received by the taxpayer but then repaid.
  PA 535: Allows a qualified taxpayer to claim a credit against the tax for qualified expenditures made for the rehabilitation of a historic resource. The credit is equal to 25% of the qualified expenditures, and may be claimed for tax years beginning after 1998 and before 2003.
1999 PA 1: Revises earmarking of income tax to School Aid Fund to hold the fund harmless from revenue reductions resulting from reductions in the personal income tax rate.
  PA 2: Reduces tax rate by one-tenth of a percentage point in tax year 2000 to 4.3%.
  PA 3: Reduces tax rate by one-tenth of a percentage point in tax year 2001 to 4.2%.
  PA 4: Reduces tax rate by one-tenth of a percentage point in tax year 2003 to 4.0%.
  PA 5: Reduces tax rate by one-tenth of a percentage point in tax year 2004 to 3.9%.
  PA 6: Reduces tax rate by one-tenth of a percentage point in tax year 2002 to 4.1% and revises school aid earmarking.
  PA 181: Provides a deduction from the state personal income tax for amounts received, by a taxpayer who is a Holocaust victim, as a result of a settlement of claims for recovered assets.
  PA 214: Extends the time period during which taxpayers may claim credits for historic preservation expenditures.
2000 PA 40: Reduces the tax rate from 4.3 percent to 4.2 percent for calendar year 2000.
  PA 41: Extends the 100 percent tax credit for property taxes in excess of 3.5 percent of their income to the totally or permanently disabled or deaf.
  PA 42: Expands the children's exemption to $600 for all children under 19.
  PA 43: Defines "dependent" as an individual for whom the taxpayer may claim a dependency exemption on the taxpayer’s federal income tax return pursuant to the internal revenue code.
  PA 162: Allows a taxpayer to deduct contributions made to an educational savings account, not to exceed $5,000 for a single return or $10,000 for a joint return, per tax year.

  PA 163: Allows a deduction for interest earned on contributions to an education savings account and also allows a deduction for a qualified withdrawal from such an account used to pay the qualified higher education expenses of the designated beneficiary of the account.

  PA 195: Strengthens the criteria by which organizations qualify as community foundations for state income tax purposes to ensure that they are legitimate foundations that can be sustained over a long-term period.
  PA 301: Raises from $900 to $1,800 special exemptions for taxpayers and dependents who are senior citizens, totally and permanently disabled, deaf, blind, para-plegic, quadriplegic, hemiplegic, and special exemptions for taxpayers whose unemployment compensation income is at least half of total adjusted gross income. Also increases the exemption from $500 to $1,500 for dependents with income exceeding $1,500.
  PA 393: Permits a taxpayer to claim a refundable credit, up to $1,200 per child, for qualified adoption expenses.

  PA 394: Provides eligibility criteria for PA 393.

  PA 400: Allows a deduction for a "qualified charitable distribution". Under the act, a "qualified charitable distribution" is a distribution of assets to a qualified charitable organization by a taxpayer not more than 60 days after the date on which the taxpayer received the assets from a retirement or pension plan.

2001 PA 169: Extends the home heating tax credit indefinitely, providing the federal government has appropriated low income energy assistance funds. If the amount of the federal funds is insufficient to finance the full credits, each credit is prorated so available funds are not exceeded.
  PA 215: Amended the Michigan Education Savings Program Act to lessen and in some cases eliminate penalties for non-qualified withdrawals from accounts established under provisions of the act.
2002 PA 75: Extends the personal income tax and single business tax credits to property subject to an agricultural conservation easement or purchase of development rights.
  PA 615: Allow resident tribal members to deduct from taxable income all non-business income earned or received in the period during which a tribal agreement was in full force and effect.
2003 PA 21: Includes in the taxable income of nonresidents, casino winnings and winnings from pari-mutuel wagering at licensed horse racing meetings.
  PA 22, 45, 46, 47, 48, 49, 50, 51: Seven bills implement the requirement that income tax be withheld from (1) distributions made by flow through entities to non-resident members; (2) casino winnings of non-residents reportable under federal law; and (3) winnings from pari-mutuel wagering reportable under federal law by race meeting licensees and track licensees.
  PA 28 & 29: Permits special assessments on property for police, fire, and advanced life support to be used in computing the homestead property tax credit beginning in the 2003 tax year. Such assessments must be levied and based on state equalized value or taxable value.
  PA 52: Revises and broadens the definition of business income to include gains or losses from stock or securities, dividend and interest income; income from isolated sales, leases, and other transactions involving property used in the taxpayer's business; and income derived from the sale of a business.
  PA 239: Delays the rate reduction from 4.0% to 3.9% from January 1, 2004, to July 1, 2004.
  PA 295: Allows a credit for the difference between the amount repaid by the Michigan Early Stage Venture Capital Investment Fund and the negotiated repayment amount if the fund could not repay the negotiated return on a person's investment. This credit is available after 2009 and before 2020.
2004 PA 313: Provides credit for automobile donations that goes to an employed person receiving public assistance.
2005 PA 160: Creates a checkoff on the income tax return to allow a taxpayer to contribute $5 or more of his or her refund to the Children's Trust Fund, beginning January 1, 2005.
  PA 214: Creates a deduction equal to all or a portion of certain equity investment gains beginning in tax years after 2006.

  PA 234: Replaces the tax credit associated with certain investments in the Michigan Early Stage Venture Capital Investment Fund with a tax voucher. Allows a taxpayer to use a tax voucher to pay a tax liability for years after 2008.
2006 PA 52: Expands the historic preservation credit for the rehabilitation of certain historic buildings, structures, and objects outside of local historic districts.

  PA 319: Allows a taxpayer to claim a refundable credit, equal to 4.5% of the personal exemption, in the tax year for which he or she had a certificate of stillbirth from the Department of Community Health.
  PA 372: Allows a taxpayer to claim a refundable credit equal to 10% of the Federal Earned Income Tax Credit.
  PA 514: Allows a taxpayer to claim a non-refundable credit equal to 75% of the contribution to a reserve fund associated with an Individual or Family Development Account.
2007 PA 94: Raises the rate to 4.35% effective October 1, 2007 to September 30, 2011; 4.25% from October 1, 2011 to September 30, 2012; 4.15% from October 1, 2012 to September 30, 2013; 4.05% from October 1, 2013 to September 30, 2014; 3.95% from October 1, 2014 to September 30, 2015; and 3.9% on and after October 1, 2015.

  PA 132: Creates four new Income Tax check-offs (minimum of $5) prostate cancer research, breast cancer research, animal welfare, and Michigan housing and community development beginning in the 2008 tax year.

2008 PA 79: Allows an eligible motion picture production company to claim a credit equal to up to 42% of the direct production expenditure.
  PA 143: Creates a new Income Tax check-off (minimum of $5) for the Military Family Relief Fund.
  PA 162: Creates a new Income Tax check-off (minimum of $5) for the Michigan Law Enforcement Memorial Monument Fund.

Uniform City Income Tax
1998 PA 500: Amends the City Income Tax Act to decrease, over 10 years, the maximum city income tax rate that the City of Detroit may levy. The maximum rate will decrease from 3% to 2% on resident individuals, and from 1.5% to 1% on nonresident individuals.

2007 PA 209: Requires that the city income tax rates (resident and non-resident) for Detroit in 2008 and 2009 shall be the same as they were in 2007, 2.5% (resident) and 1.25% (non-resident).

 

 

 

 

 

 

Last Updated July 22, 2008