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Plan to cut Michigan’s income tax in the works

Jake Neher

Republican state lawmakers hope to introduce legislation this month that would cut Michigan’s income tax rate. The plan would take the rate from 4.25% down to 3.9%.

Supporters of the idea say it would save Michigan taxpayers somewhere around $200 million a year. And with a budget surplus estimated at more than $1 billion over the next couple of years, they say the state can afford an election-year tax cut.

Some Republicans say they hope to draw down the income tax even lower than 3.9% if the state’s finances continue to improve. 

“Maybe we should be going back to giving the extra increase over the rate of inflation back to the taxpayers by lowering it to 3.8%, 3.7%, and so on and so forth, as far as we can go,” said state House Tax Policy Committee Chair Jeff Farrington (R-Utica).

“Wouldn’t it be nice if, someday, we got down to 0% on the income tax? I don’t think it’s achievable, but it’d be a nice goal to try to attain.”

Many Democrats in the state Legislature also favor an election-year tax cut. But they say they’d rather repeal the state’s tax on retiree pensions and restore tax credits for low-income families.