Detroit Evening Report: Michigan Democrats introduce plans to reduce income tax bills by $1 billion

Michigan Democrats are making plans to lower income tax bills by $1 billion, possibly providing relief to households that are struggling with rising prices due to inflation.

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The state Legislature’s new democratic majorities introduced bills Thursday to undo retirement tax changes by former Republican Governor Rick Snyder a decade ago. The proposed plan would also exempt public pensions from the income tax and restore larger deductions for private retirement income, affecting about 500,000 households.

Democrats also revealed plans to expand the earned income tax credit from 6% to 30% by the end of 2025. This increase will help roughly 700,000 Michigan families get an additional $600 in tax relief according to Michigan League of Public Policy. Gov. Gretchen Whitmer’s previous attempt to expand the earned income tax credit failed in the Republican-led Legislature.

“These policies are a way that we can really help Michiganders who are struggling right now,” Whitmer said Thursday. “That’s why this is a moment to be optimistic and be excited about where we are headed and get it done so we can help people.”

The proposed bills will continue to be negotiated and requires the cooperation with state Republicans to have a chance of passing before 2024.

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