It appears that Governor Snyder’s sweeping budget is going to become law, enacting some sweeping changes to the taxing of businesses and individuals in the State of Michigan. Here are some of the details:
Bye Bye MBT – the Michigan Business Tax (MBT) will be replaced with a 6% income tax on corporate profits. The MBT currently is made up of a Gross Receipts tax and a Business Income tax. The corporate income tax will likely be similar to the way income is taxed currently under the MBT, but the devil will be in the details, so we’ll have to wait and see.
Personal Income Tax rate reduced – The personal income tax rate will be reduced from the current 4.35% to 4.25% starting in 2013. The average Michigander makes approximately $45,000, so the average reduction in tax would be $45 (this is an oversimplified calculation to show the relative difference a .1% change in income tax will be. Actual results may vary!)
For Seniors – Deductions for interest, dividend or pension benefits are substantially eliminated. This can have a big difference in the amount some seniors have to pay. There are various limitations based on income and age. More on this as the details get finalized and are released.
Many Credits are reduced/eliminated – a number of business and personal credits will be reduced eliminated. An example would be the property tax credit for individuals which is utilized by many middle income individuals as well as seniors. The film credit for businesses would also be eliminated.
More to follow…