SUMMARY OF SENATE BILL 472 as introduced 4-26-95:

The bill would amend the Income Tax Act to allow a senior citizen to deduct from taxable income, to the extent included in Federal adjusted gross income, interest, dividends, and capital gains received in a tax year up to $30,000 for a single return or $60,000 for a joint return. The provision would apply to the 1995 tax year and thereafter.

Currently, under the Act, a senior may deduct interest and dividend income of up to $1,000 for a single or $2,000 for a joint return. The deduction may not be claimed, however, if the senior claims a deduction for certain retirement benefits allowed elsewhere in the Act (retirement income received from service in the armed forces; benefits received from a Federal retirement system, or a public retirement system of the State or a political subdivision of the State; benefits received from a public retirement system created by another state or any of its political subdivisions, if the income tax laws of the other state permit a reciprocal deduction or exemption of a benefit received from this State; and benefits from a retirement annuity policy in which payments are made for life). The bill provides, instead, that the maximum amount that could be claimed by a senior citizen ($30,000 single/$60,000 joint return) would have to be reduced by the amount of those retirement benefits deducted by the senior.

MCL 206.30 Legislative Analyst: G. Towne

FISCAL IMPACT

This bill would reduce income tax liabilities for senior citizens by an estimated $167 million in FY 1995-96. This reduction in the income tax would have an impact on several areas of the overall State budget: Revenue sharing would be reduced by an estimated $12.2 million, School Aid Fund income tax earmarking would be decreased by $24.0 million, and General Fund/General Purpose revenue would be reduced by $130.8 million.

Fiscal Analyst: J. Wortley

S9596\S472SA

This analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent.

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