February 11, 2009, Introduced by Rep. Opsommer and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 510, 520, and 522 (MCL 206.510, 206.520, and
206.522), sections 510 and 520 as amended by 1995 PA 245 and
section 522 as amended by 2000 PA 41.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 510. (1) "Income" means the sum of federal adjusted
2 gross income as defined in the internal revenue code plus all
3 income specifically excluded or exempt from the computations of
4 the federal adjusted gross income except that beginning with the
5 1988 tax year, a deduction for a carryback or carryover of a net
6 operating loss shall not exceed federal modified taxable income
7 as defined in section 172(b)(2) of the internal revenue code.
1 Also, a person who is enrolled in an accident or health insurance
2 plan may deduct from income the amount that person paid in
3 premiums in the tax year for that insurance plan for the person's
4 family. Also, beginning with the 2009 tax year, a person may
5 deduct from income the amount that the person paid as additional
6 tax on an early distribution from a traditional individual
7 retirement account, 401(k) plan, or other qualified retirement
8 plan in the tax year. Income does not include any of the
9 following:
10 (a) The first $300.00 of gifts in cash or kind from
11 nongovernmental sources.
12 (b) The first $300.00 received from awards, prizes, lottery,
13 bingo, or other gambling winnings.
14 (c) Surplus foods.
15 (d) Relief in kind supplied by a governmental agency.
16 (e) Payments or credits under this act.
17 (f) A governmental grant that has to be used by the claimant
18 for rehabilitation of the claimant's homestead.
19 (g) Stipends received by a person 60 years of age or older
20 who is acting as a foster grandparent under the foster
21 grandparent program authorized pursuant to section 211 of part B
22 of title II of the domestic volunteer service act of 1973, Public
23 Law 93-113, 42 U.S.C. USC
5011, or who is acting as a senior
24 companion pursuant to section 213 of part C of title II of the
25 domestic volunteer service act of 1973, Public Law 93-113, 42
26 U.S.C. USC 5013.
27 (h) Amounts deducted from monthly social security or
1 railroad retirement benefits for medicare premiums.
2 (i) Contributions by an employer to life, accident, or
3 health insurance plans.
4 (j) Energy assistance grants and energy assistance tax
5 credits.
6 (k) The first 50% of veteran's disability payments.
7 (2) "Owner" means a natural person who owns or is purchasing
8 a homestead under a mortgage or land contract, who owns or is
9 purchasing a dwelling situated on the leased lands of another, or
10 who is a tenant-stockholder of a cooperative housing corporation.
11 Sec. 520. (1) Subject to the limitations and the definitions
12 in this chapter, a claimant may claim against the tax due under
13 this act for the tax year a credit for the property taxes on the
14 taxpayer's homestead deductible for federal income tax purposes
15 pursuant to section 164 of the internal revenue code, or that
16 would have been deductible if the claimant had not elected the
17 zero bracket amount or if the claimant had been subject to the
18 federal income tax. The property taxes used for the credit
19 computation shall not be greater than the amount levied for 1 tax
20 year.
21 (2) A person who rents or leases a homestead may claim a
22 similar credit computed under this section and section 522 based
23 upon 17% of the gross rent paid for tax years before the 1994 tax
24 year, or 20% of the gross rent paid for tax years after the 1993
25 tax year. A person who rents or leases a homestead subject to a
26 service charge in lieu of ad valorem taxes as provided by section
27 15a of the state housing development authority act of 1966, Act
1 No. 346 of the Public Acts of 1966, being section 125.1415a of
2 the Michigan Compiled Laws 1966
PA 346, MCL 125.1415a, may claim
3 a similar credit computed under this section and section 522
4 based upon 10% of the gross rent paid.
5 (3) If the credit claimed under this section and section 522
6 exceeds the tax liability for the tax year or if there is no tax
7 liability for the tax year, the amount of the claim not used as
8 an offset against the tax liability shall, after examination and
9 review, be approved for payment, without interest, to the
10 claimant. In determining the amount of the payment under this
11 subsection, withholdings and other credits shall be used first to
12 offset any tax liabilities.
13 (4) If the homestead is an integral part of a multipurpose
14 or multidwelling building that is federally aided housing or
15 state aided housing, a claimant who is a senior citizen entitled
16 to a payment under subsection (2) may assign the right to that
17 payment to a mortgagor if the mortgagor reduces the rent charged
18 and collected on the claimant's homestead in an amount equal to
19 the tax credit payment provided in this chapter. The assignment
20 of the claim is valid only if the Michigan state housing
21 development authority, by affidavit, verifies that the claimant's
22 rent has been so reduced.
23 (5) Only the renter or lessee shall claim a credit on
24 property that is rented or leased as a homestead.
25 (6) A person who discriminates in the charging or collection
26 of rent on a homestead by increasing the rent charged or
27 collected because the renter or lessee claims and receives a
1 credit or payment under this chapter is guilty of a misdemeanor.
2 Discrimination against a renter who claims and receives the
3 credit under this section and section 522 by a reduction of the
4 rent on the homestead of a person who does not claim and receive
5 the credit is a misdemeanor. If discriminatory rents are charged
6 or collected, each charge or collection of the higher or lower
7 payment is a separate offense. Each acceptance of a payment of
8 rent is a separate offense.
9 (7) A person who received aid to families with dependent
10 children, state family assistance, or state disability assistance
11 through department of human services programs pursuant to the
12 social welfare act, Act No. 280 of the Public Acts of 1939, as
13 amended, being sections 400.1 to 400.119b of the Michigan
14 Compiled Laws 1939 PA
280, MCL 400.1 to 400.119b, in the tax
year
15 for which the person is filing a return shall have a credit that
16 is authorized and computed under this section and section 522
17 reduced by an amount equal to the product of the claimant's
18 credit multiplied by the quotient of the sum of the claimant's
19 aid to families with dependent children, state family assistance,
20 and state disability assistance
through department of human
21 services programs pursuant to the social welfare act, 1939 PA
22 280, MCL 400.1 to 400.119b, for the tax year divided by the
23 claimant's household income. The reduction of credit shall not
24 exceed the sum of the aid to families with dependent children,
25 state family assistance, and state disability assistance through
26 department of human services programs pursuant to the social
27 welfare act, 1939 PA 280, MCL 400.1 to 400.119b, for the tax
1 year. For the purposes of this subsection, aid to families with
2 dependent children any
assistance through department of human
3 services programs does not include child support payments that
4 offset or reduce payments made to the claimant.
5 (8) A For
tax years that begin before January
1, 2010, a
6 credit under subsection (1) or (2) shall be reduced by 10% for
7 each claimant whose household income exceeds $73,650.00 and by an
8 additional 10% for each increment of $1,000.00 of household
9 income in excess of $73,650.00. For the 2010 tax year and each
10 tax year after 2010, the maximum household income allowed under
11 this subsection shall be adjusted annually for inflation by using
12 the percentage increase in the Detroit consumer price index for
13 the immediately preceding calendar year. The department shall
14 annualize the amount provided in this subsection as necessary. As
15 used in this subsection, "Detroit consumer price index" means the
16 most comprehensive index of consumer prices available for the
17 Detroit area from the United States department of labor, bureau
18 of labor statistics.
19 (9) If the credit authorized and calculated under this
20 section and section 522 and adjusted under subsection (7) or (8)
21 does not provide to a senior citizen who rents or leases a
22 homestead that amount attributable to rent that constitutes more
23 than 40% of the household income of the senior citizen, the
24 senior citizen may claim a credit based upon the amount of
25 household income attributable to rent as provided by this
26 section.
27 (10) A senior citizen whose gross rent paid for the tax year
1 is more than the percentage of household income specified in
2 subsection (9) for the respective tax year may claim a credit for
3 the amount of rent paid that constitutes more than the percentage
4 of the household income of the senior citizen specified in
5 subsection (9) and that was not provided to the senior citizen by
6 the credit computed pursuant to this section and section 522 and
7 adjusted pursuant to subsection (7) or (8).
8 (11) The department may promulgate rules to implement
9 subsections (9) to (16) (14)
and may prescribe a table to allow a
10 claimant to determine the credit provided under this section and
11 section 522 in the instruction booklet that accompanies the
12 respective income tax or property tax credit forms used by
13 claimants.
14 (12) A senior citizen may claim the credit under subsections
15 (9) to (16) (14) on the same form as the property tax credit
16 permitted by subsection (2). The department shall adjust the
17 forms accordingly.
18 (13) A senior citizen who moves to a different rented or
19 leased homestead shall determine, for 2 tax years after the move,
20 both his or her qualification to claim a credit under subsections
21 (9) to (16) (14) and the amount of a credit under subsections (9)
22 to (16) (14) on the basis of the annualized final monthly rental
23 payment at his or her previous homestead, if this annualized
24 rental is less than the senior citizen's actual annual rental
25 payments.
26 (14) For a return of less than 12 months, the claim for a
27 credit under subsections (9) to (16) (13) shall
be reduced
1 proportionately.
2 (15) The Michigan state housing development authority shall
3 report on the effect of the credit provided by subsections (9) to
4 (16) (14) on the price of rented and leased homesteads. If the
5 authority determines that the price of rented and leased
6 homesteads has increased as a result of the credit provided by
7 subsections (9) to (16) (14), the authority shall make
8 recommendations to the legislature to remedy this situation. The
9 report shall be made to the chairpersons of the house and senate
10 committees that have primary responsibility for taxation
11 legislation 2 years after the credit provided by subsections (9)
12 to (16) (14) is in effect.
13 (16) The total credit allowed by this section and section
14 522 shall not exceed $1,200.00 per year.
15 Sec. 522. (1) The amount of a claim made pursuant to this
16 chapter shall be determined as follows:
17 (a) A claimant is entitled to a credit against the state
18 income tax liability equal to 60% of the amount by which the
19 property taxes on the homestead, or the credit for rental of the
20 homestead for the tax year, exceeds 3.5% of the claimant's
21 household income for that tax year.
22 (b) A claimant who is a senior citizen or a paraplegic,
23 hemiplegic, or quadriplegic and for tax years that begin after
24 December 31, 1999, a claimant who is totally and permanently
25 disabled or deaf is entitled to a credit against the state income
26 tax liability for the amount by which the property taxes on the
27 homestead, the credit for rental of the homestead, or a service
1 charge in lieu of ad valorem taxes as provided by section 15a of
2 the state housing development authority act of 1966, 1966 PA 346,
3 MCL 125.1415a, for the tax year exceeds the percentage of the
4 claimant's household income for that tax year computed as
5 follows:
6 Household income Percentage
7
Not over $3,000.00 $6,000.00 .0%
8
Over $3,000.00 $6,000.00 but
9
not over $4,000.00 $8,000.00 1.0%
10
Over $4,000.00 $8,000.00 but
11
not over $5,000.00 $10,000.00 2.0%
12
Over $5,000.00 $10,000.00 but
13
not over $6,000.00 $12,000.00 3.0%
14
Over $6,000.00 $12,000.00 3.5%
15 (c) For a tax year that begins before January 1, 2000, a
16 claimant who is totally and permanently disabled is entitled to a
17 credit against the state income tax liability equal to 60% of the
18 amount by which the property taxes on the homestead, or the
19 credit for rental of the homestead or for a service charge in
20 lieu of ad valorem taxes as provided in section 15a of the state
21 housing development authority act of 1966, 1966 PA 346, MCL
22 125.1415a, for the tax year, exceeds the percentage of the
23 claimant's household income for that tax year based on the
24 schedule in subdivision (b).
25 (d) A claimant who is an eligible serviceperson, eligible
26 veteran, or eligible widow or widower is entitled to a credit
1 against the state income tax liability for a percentage of the
2 property taxes on the homestead for the tax year not in excess of
3 100% determined as follows:
4 (i) Divide the taxable value allowance specified in section
5 506 by the taxable value of the homestead or, if the eligible
6 serviceperson, eligible veteran, or eligible widow or widower
7 leases or rents a homestead, divide 17% of the total annual rent
8 paid for tax years before the 1994 tax year, or 20% of the total
9 annual rent paid for tax years after the 1993 tax year on the
10 property by the property tax rate on the property.
11 (ii) Multiply the property taxes on the homestead by the
12 percentage computed in subparagraph (i).
13 (e) A claimant who is blind is entitled to a credit against
14 the state income tax liability for a percentage of the property
15 taxes on the homestead for the tax year determined as follows:
16 (i) If the taxable value of the homestead is $3,500.00 or
17 less, 100% of the property taxes.
18 (ii) If the taxable value of the homestead is more than
19 $3,500.00, the percentage that $3,500.00 bears to the taxable
20 value of the homestead.
21 (2) A person who is qualified to make a claim under more
22 than 1 classification shall elect the classification under which
23 the claim is made.
24 (3) Only 1 claimant per household for a tax year is entitled
25 to the credit, unless both the husband and wife filing a joint
26 return are blind, then each shall be considered a claimant.
27 (4) As used in this section, "totally and permanently
1 disabled" means disability as defined in section 216 of title II
2 of the social security act, 42 U.S.C. USC 416.
3 (5) A senior citizen who has a total household income for
4 the tax year of $6,000.00 or less and who for 1973 received a
5 senior citizen homestead exemption under former section 7c of the
6 general property tax act, Act No. 206 of the Public Acts of 1893
7 1893 PA 206, may compute the credit against the state income tax
8 liability for a percentage of the property taxes on the homestead
9 for the tax year determined as follows:
10 (a) If the taxable value of the homestead is $2,500.00 or
11 less, 100% of the property taxes.
12 (b) If the taxable value of the homestead is more than
13 $2,500.00, the percentage that $2,500.00 bears to the taxable
14 value of the homestead.
15 (6) For a return of less than 12 months, the claim shall be
16 reduced proportionately.
17 (7) The commissioner may prescribe tables that may be used
18 to determine the amount of the claim.
19 (8) The total credit allowed in this section for each year
20 after December 31, 1975 shall not exceed $1,200.00 per year.
21 (9) The total credit allowable under this act and part 361
22 of the natural resources and environmental protection act, 1994
23 PA 451, MCL 324.36101 to 324.36117, shall not exceed the total
24 property tax due and payable by the claimant in that year. The
25 amount by which the credit exceeds the property tax due and
26 payable shall be deducted from the credit claimed under part 361
27 of the natural resources and environmental protection act, 1994
1 PA 451, MCL 324.36101 to 324.36117.