The Michigan Senate has passed a bill that could provide tax credit to low-income earners eligible for the expanded Working Families Tax Credit, which is scheduled to take effect next year. This tax credit is a subsidy for the wages of low-income workers and is currently set at a fraction of the federal Earned Income Tax Credit (EITC).
Bill to Increase Working Families Tax Credit:
Earlier this year, according to Detroit Free Press, Governor Gretchen Whitmer approved a tax overhaul to increase the Working Families Tax Credit from 6% to 30% of the federal credit. However, the legislation required GOP support to take immediate effect, delaying its implementation until next
Over one million working families qualify for the expanded Working Families Tax Credit, which was approved earlier this year. The bill passed in the state Senate with the support of every Democratic lawmaker and seven Republicans. The legislation has bipartisan support, indicating that it may likely garner the two-thirds vote needed for the tax relief to kick in before the next tax year.
Senate Bill 144 has been approved by the Senate, allowing individuals who claimed the EITC in their 2022 filing to claim the expanded credit for the 2022 tax year only. The legislation directs the Department of Treasury to determine the additional credit individuals would be eligible to receive and provide refund checks. The cost to the state is expected to be approximately $441.6 million, according to the Senate Fiscal Agency.
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Criticism and Approval:
While the bill has received bipartisan support, GOP state Sen. Joe Bellino criticized Democrats for folding the proposal into a larger package, delaying the vote. However, the bipartisan support for the legislation indicates it will likely garner the two-thirds vote needed for the tax relief to kick in before the next tax year.
Lawmakers in the state House must approve the bill before it can head to Whitmer for her signature. The legislation’s approval could significantly benefit low-income earners in Michigan, whose state EITC is currently one of the least generous in the country. If the bill passes, eligible taxpayers could see a boost to their returns.
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