Trump Tax Cut Clean Up Signed With $4,900 Personal Exemption
March 6, 2018
Wednesday Michigan became the first state to enact a law designed to prevent a potential “surprise” state tax increase of as much as $1.5 billion from President Donald Trump’s tax reform plan when Gov. Rick Snyder signed legislation flanked by both legislative leaders and Lt. Gov. Brian Calley.
The bills are designed to allow Michiganders to continue to claim the personal exemption credit to state income taxes after the federal law zeroed out the personal exemption amount for federal income taxes, which Patrick Anderson of the Anderson Economic Group said impacted at least nine states.
Anderson thanked state Treasurer Nick Khouri for asking the Legislature to clarify the law and Snyder for “setting the bar where it should be for state governments.”
SB 0748 and SB 0750 also increases the state’s personal exemption 22.5 percent from $4,000 to $4,900 by 2021, after which it will be increased annually based on inflation.
“I firmly believe that people spend their money better than government,” said Senate Majority Leader Arlan Meekhof (R-West Olive). “This tax relief means
The Senate Fiscal Agency is estimating that the bills will cost the state $150 million in Fiscal Year (FY) 2020, $189.4 million in FY 2021 and $206.0 million each year after that.
The technical fix related to the federal reforms saves $170 per person per year — or $680 for a family of four — on state income taxes. The plan to raise the personal exemption to $4,900 is designed to save the family of four $102 a year when it’s fully phased in in 2021, according to Rep. Jeff Noble (R-Plymouth).
“It’s their money, not state government’s money,” Noble said.
Snyder also signed into law:
– Rep. Tommy Brann’s (R-Wyoming) HB 5175, which makes it easier for merchants to sell a growler of beer.
– Rep. John Bizon’s (R-Battle Creek) HB 4472, which allows pharmacists to help patients save money by selling them a less expensive biological drug that the Food and Drug Administration classified as similar to their doctor-prescribed one.
– Rep. Rob VerHeulen’s (R-Walker) HB 4665, which allows students enrolled in a strict discipline academy to remain enrolled at that school after their term of suspension or expulsion from a previous school district ends or as long as their parents or guardians want.