Michigan House OKs cut to state's personal income tax rate

Beth LeBlanc, The Detroit News on Mar 18, 2025

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LANSING, Mich. — The Michigan House on Tuesday voted 65-43 to lower the state's income tax rate from 4.25% to 4.05%, with several Democratic lawmakers joining Republicans in support of the measure.

The tax relief legislation sponsored by state Rep. Kathy Schmaltz, R-Jackson, moves to the Senate next for consideration. Republicans framed the bill as continuing a short, one-year stint in 2023 when the income tax rate was lowered to 4.05% because a statutory formula triggered the decrease due to a post-pandemic surge in surplus tax revenue.

"That law was intended to be a permanent tax cut," Schmaltz said. "Unfortunately, our current administration said the tax cut was only temporary."

It's unclear what sort of reception the legislation will receive in the Democratic-led Senate or with Democratic Gov. Gretchen Whitmer. Spokespersons for Whitmer and Senate Majority Leader Winnie Brinks, D-Grand Rapids, did not immediately answer questions regarding the leaders' positions on the legislation, House Bill 4170.

Democratic lawmakers who voted in favor of the bill included Reps. Kelly Breen of Novi, John Fitzgerald of Wyoming, Matt Koleszar of Plymouth, Denise Mentzer of Mount Clemens, Reggie Miller of Van Buren Township, Angela Witwer of Delta Township and Mai Xiong of Warren.

The legislation, if signed into law, would likely decrease state revenues by more than $700 million a year and lead to paltry savings for lower-income residents, said state Rep. Jasper Martus, D-Flushing.

Lower-income earners making about $27,000 a year would see about $11 a year in tax relief under the legislation, making the proposal a bit of a schtick for the majority of Michigan residents, Martus said.

"The real people who will benefit from this are the multimillionaires," Martus said.

Majority Floor Leader Bryan Posthumus, R-Cannon Township, said the tax cut legislation is "an important step in the right direction."

"Our state doesn't need more revenue," he said. "It needs less government."

The introduction of the tax cut comes as lawmakers and the governor are scrounging for new revenue for the state's infrastructure, which is facing a $3.9 billion funding shortfall next year. The House is expected to vote on a raft of different bills Wednesday to cement a road funding plan through cuts to the current state budget and a reshuffling of taxes paid at the pump.

The income tax rate dipped briefly in 2023 due to a 2015 state law approved by a Republican-controlled Legislature that allowed the income tax rate to drop, through a formula, if general fund revenues grow faster than inflation. For 2023, the calculation meant the rate dropped from 4.25% to 4.05%.

Republicans maintained the decrease was supposed to be permanent. But Whitmer and Michigan Attorney General Dana Nessel, both Democrats, found the tax cuts should last for one year and the formula should be used again based on the original rate of 4.25% annually.

Later court decisions upheld that interpretation.

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