March 24, 2015, Introduced by Reps. Hughes, Hooker, Graves, Sheppard, Glenn, Tedder, Barrett, Chatfield, Somerville and Runestad and referred to the Committee on Tax Policy.
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 30, 520, and 522 (MCL 206.30, 206.520, and
206.522), section 30 as amended by 2012 PA 597, section 520 as
amended by 2011 PA 273, and section 522 as amended by 2013 PA
206.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
1 Sec. 30. (1) "Taxable income" means, for a person other than
2 a corporation, estate, or trust, adjusted gross income as defined
3 in the internal revenue code subject to the following adjustments
4 under this section:
5 (a) Add gross interest income and dividends derived from
6 obligations or securities of states other than Michigan, in the
7 same amount that has been excluded from adjusted gross income
1 less related expenses not deducted in computing adjusted gross
2 income because of section 265(a)(1) of the internal revenue code.
3 (b) Add taxes on or measured by income to the extent the
4 taxes have been deducted in arriving at adjusted gross income.
5 (c) Add losses on the sale or exchange of obligations of the
6 United States government, the income of which this state is
7 prohibited from subjecting to a net income tax, to the extent
8 that the loss has been deducted in arriving at adjusted gross
9 income.
10 (d) Deduct, to the extent included in adjusted gross income,
11 income derived from obligations, or the sale or exchange of
12 obligations, of the United States government that this state is
13 prohibited by law from subjecting to a net income tax, reduced by
14 any interest on indebtedness incurred in carrying the obligations
15 and by any expenses incurred in the production of that income to
16 the extent that the expenses, including amortizable bond
17 premiums, were deducted in arriving at adjusted gross income.
18 (e) Deduct, to the extent included in adjusted gross income,
19 the following:
20 (i) Compensation, including retirement benefits, received for
21 services in the armed forces of the United States.
22 (ii) Retirement or pension benefits under the railroad
23 retirement act of 1974, 45 USC 231 to 231v.
24 (iii) beginning Beginning January 1, 2012,
retirement or
25 pension benefits received for services in the Michigan national
26 guard.
27 (f) Deduct the following to the extent included in adjusted
1 gross income: subject to the limitations and restrictions set
2 forth in subsection (9):
3 (i) Retirement or pension benefits received from a federal
4 public retirement system or from a public retirement system of or
5 created by this state or a political subdivision of this state.
6 (ii) Retirement or pension benefits received from a public
7 retirement system of or created by another state or any of its
8 political subdivisions if the income tax laws of the other state
9 permit a similar deduction or exemption or a reciprocal deduction
10 or exemption of a retirement or pension benefit received from a
11 public retirement system of or created by this state or any of
12 the political subdivisions of this state.
13 (iii) Social security benefits as defined in section 86 of the
14 internal revenue code.
15 (iv) Beginning on and after January 1, 2007, retirement or
16 pension benefits not deductible under subparagraph (i) or
17 subdivision (e) from any other retirement or pension system or
18 benefits from a retirement annuity policy in which payments are
19 made for life to a senior citizen, to a maximum of $42,240.00 for
20 a single return and $84,480.00 for a joint return. The maximum
21 amounts allowed under this subparagraph shall be reduced by the
22 amount of the deduction for retirement or pension benefits
23 claimed under subparagraph (i) or subdivision (e) and by the
24 amount of a deduction claimed under subdivision (p). For the 2008
25 tax year and each tax year after 2008, the maximum amounts
26 allowed under this subparagraph shall be adjusted by the
27 percentage increase in the United States consumer price index for
1 the immediately preceding calendar year. The department shall
2 annualize the amounts provided in this subparagraph as necessary.
3 As used in this subparagraph, "senior citizen" means that term as
4 defined in section 514.
5 (v) The amount determined to be the section 22 amount
6 eligible for the elderly and the permanently and totally disabled
7 credit provided in section 22 of the internal revenue code.
8 (g) Adjustments resulting from the application of section
9 271.
10 (h) Adjustments with respect to estate and trust income as
11 provided in section 36.
12 (i) Adjustments resulting from the allocation and
13 apportionment provisions of chapter 3.
14 (j) Deduct the following payments made by the taxpayer in
15 the tax year:
16 (i) For the 2010 tax year and each tax year after 2010, the
17 amount of a charitable contribution made to the advance tuition
18 payment fund created under section 9 of the Michigan education
19 trust act, 1986 PA 316, MCL 390.1429.
20 (ii) The amount of payment made under an advance tuition
21 payment contract as provided in the Michigan education trust act,
22 1986 PA 316, MCL 390.1421 to 390.1442.
23 (iii) The amount of payment made under a contract with a
24 private sector investment manager that meets all of the following
25 criteria:
26 (A) The contract is certified and approved by the board of
27 directors of the Michigan education trust to provide equivalent
1 benefits and rights to purchasers and beneficiaries as an advance
2 tuition payment contract as described in subparagraph (ii).
3 (B) The contract applies only for a state institution of
4 higher education as defined in the Michigan education trust act,
5 1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior
6 college in Michigan.
7 (C) The contract provides for enrollment by the contract's
8 qualified beneficiary in not less than 4 years after the date on
9 which the contract is entered into.
10 (D) The contract is entered into after either of the
11 following:
12 (I) The purchaser has had his or her offer to enter into an
13 advance tuition payment contract rejected by the board of
14 directors of the Michigan education trust, if the board
15 determines that the trust cannot accept an unlimited number of
16 enrollees upon an actuarially sound basis.
17 (II) The board of directors of the Michigan education trust
18 determines that the trust can accept an unlimited number of
19 enrollees upon an actuarially sound basis.
20 (k) If an advance tuition payment contract under the
21 Michigan education trust act, 1986 PA 316, MCL 390.1421 to
22 390.1442, or another contract for which the payment was
23 deductible under subdivision (j) is terminated and the qualified
24 beneficiary under that contract does not attend a university,
25 college, junior or community college, or other institution of
26 higher education, add the amount of a refund received by the
27 taxpayer as a result of that termination or the amount of the
1 deduction taken under subdivision (j) for payment made under that
2 contract, whichever is less.
3 (l) Deduct from the taxable income of a purchaser the amount
4 included as income to the purchaser under the internal revenue
5 code after the advance tuition payment contract entered into
6 under the Michigan education trust act, 1986 PA 316, MCL 390.1421
7 to 390.1442, is terminated because the qualified beneficiary
8 attends an institution of postsecondary education other than
9 either a state institution of higher education or an institution
10 of postsecondary education located outside this state with which
11 a state institution of higher education has reciprocity.
12 (m) Add, to the extent deducted in determining adjusted
13 gross income, the net operating loss deduction under section 172
14 of the internal revenue code.
15 (n) Deduct a net operating loss deduction for the taxable
16 year as determined under section 172 of the internal revenue code
17 subject to the modifications under section 172(b)(2) of the
18 internal revenue code and subject to the allocation and
19 apportionment provisions of chapter 3 of this part for the
20 taxable year in which the loss was incurred.
21 (o) Deduct, to the extent included in adjusted gross income,
22 benefits from a discriminatory self-insurance medical expense
23 reimbursement plan.
24 (p) Beginning on and after January 1, 2007, subject to any
25 limitation provided in this subdivision, a taxpayer who is a
26 senior citizen may deduct to the extent included in adjusted
27 gross income, interest, dividends, and capital gains received in
1 the tax year not to exceed $9,420.00 for a single return and
2 $18,840.00 for a joint return. The maximum amounts allowed under
3 this subdivision shall be reduced by the amount of a deduction
4 claimed for retirement benefits under subdivision (e) or a
5 deduction claimed under subdivision (f)(i), (ii), (iv), or (v). For
6 the 2008 tax year and each tax year after 2008, the maximum
7 amounts allowed under this subdivision shall be adjusted by the
8 percentage increase in the United States consumer price index for
9 the immediately preceding calendar year. The department shall
10 annualize the amounts provided in this subdivision as necessary.
11 Beginning January 1, 2012, the deduction under this subsection is
12 not available to a senior citizen born after 1945. As used in
13 this subdivision, "senior citizen" means that term as defined in
14 section 514.
15 (q) Deduct, to the extent included in adjusted gross income,
16 all of the following:
17 (i) The amount of a refund received in the tax year based on
18 taxes paid under this part.
19 (ii) The amount of a refund received in the tax year based on
20 taxes paid under the city income tax act, 1964 PA 284, MCL
21 141.501 to 141.787.
22 (iii) The amount of a credit received in the tax year based on
23 a claim filed under sections 520 and 522 to the extent that the
24 taxes used to calculate the credit were not used to reduce
25 adjusted gross income for a prior year.
26 (r) Add the amount paid by the state on behalf of the
27 taxpayer in the tax year to repay the outstanding principal on a
1 loan taken on which the taxpayer defaulted that was to fund an
2 advance tuition payment contract entered into under the Michigan
3 education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if
4 the cost of the advance tuition payment contract was deducted
5 under subdivision (j) and was financed with a Michigan education
6 trust secured loan.
7 (s) Deduct, to the extent included in adjusted gross income,
8 any amount, and any interest earned on that amount, received in
9 the tax year by a taxpayer who is a Holocaust victim as a result
10 of a settlement of claims against any entity or individual for
11 any recovered asset pursuant to the German act regulating
12 unresolved property claims, also known as Gesetz zur Regelung
13 offener Vermogensfragen, as a result of the settlement of the
14 action entitled In re: Holocaust victim assets litigation, CV-96-
15 4849, CV-96-5161, and CV-97-0461 (E.D. NY), or as a result of any
16 similar action if the income and interest are not commingled in
17 any way with and are kept separate from all other funds and
18 assets of the taxpayer. As used in this subdivision:
19 (i) "Holocaust victim" means a person, or the heir or
20 beneficiary of that person, who was persecuted by Nazi Germany or
21 any Axis regime during any period from 1933 to 1945.
22 (ii) "Recovered asset" means any asset of any type and any
23 interest earned on that asset including, but not limited to, bank
24 deposits, insurance proceeds, or artwork owned by a Holocaust
25 victim during the period from 1920 to 1945, withheld from that
26 Holocaust victim from and after 1945, and not recovered,
27 returned, or otherwise compensated to the Holocaust victim until
1 after 1993.
2 (t) Deduct, to the extent not deducted in determining
3 adjusted gross income, both of the following:
4 (i) Contributions made by the taxpayer in the tax year less
5 qualified withdrawals made in the tax year from education savings
6 accounts, calculated on a per education savings account basis,
7 pursuant to the Michigan education savings program act, 2000 PA
8 161, MCL 390.1471 to 390.1486, not to exceed a total deduction of
9 $5,000.00 for a single return or $10,000.00 for a joint return
10 per tax year. The amount calculated under this subparagraph for
11 each education savings account shall not be less than zero.
12 (ii) The amount under section 30f.
13 (u) Add, to the extent not included in adjusted gross
14 income, the amount of money withdrawn by the taxpayer in the tax
15 year from education savings accounts, not to exceed the total
16 amount deducted under subdivision (t) in the tax year and all
17 previous tax years, if the withdrawal was not a qualified
18 withdrawal as provided in the Michigan education savings program
19 act, 2000 PA 161, MCL 390.1471 to 390.1486. This subdivision does
20 not apply to withdrawals that are less than the sum of all
21 contributions made to an education savings account in all
22 previous tax years for which no deduction was claimed under
23 subdivision (t), less any contributions for which no deduction
24 was claimed under subdivision (t) that were withdrawn in all
25 previous tax years.
26 (v) A taxpayer who is a resident tribal member may deduct,
27 to the extent included in adjusted gross income, all nonbusiness
1 income earned or received in the tax year and during the period
2 in which an agreement entered into between the taxpayer's tribe
3 and this state pursuant to section 30c of 1941 PA 122, MCL
4 205.30c, is in full force and effect. As used in this
5 subdivision:
6 (i) "Business income" means business income as defined in
7 section 4 and apportioned under chapter 3.
8 (ii) "Nonbusiness income" means nonbusiness income as defined
9 in section 14 and, to the extent not included in business income,
10 all of the following:
11 (A) All income derived from wages whether the wages are
12 earned within the agreement area or outside of the agreement
13 area.
14 (B) All interest and passive dividends.
15 (C) All rents and royalties derived from real property
16 located within the agreement area.
17 (D) All rents and royalties derived from tangible personal
18 property, to the extent the personal property is utilized within
19 the agreement area.
20 (E) Capital gains from the sale or exchange of real property
21 located within the agreement area.
22 (F) Capital gains from the sale or exchange of tangible
23 personal property located within the agreement area at the time
24 of sale.
25 (G) Capital gains from the sale or exchange of intangible
26 personal property.
27 (H) All pension income and benefits including, but not
1 limited to, distributions from a 401(k) plan, individual
2 retirement accounts under section 408 of the internal revenue
3 code, or a defined contribution plan, or payments from a defined
4 benefit plan.
5 (I) All per capita payments by the tribe to resident tribal
6 members, without regard to the source of payment.
7 (J) All gaming winnings.
8 (iii) "Resident tribal member" means an individual who meets
9 all of the following criteria:
10 (A) Is an enrolled member of a federally recognized tribe.
11 (B) The individual's tribe has an agreement with this state
12 pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in
13 full force and effect.
14 (C) The individual's principal place of residence is located
15 within the agreement area as designated in the agreement under
16 sub-subparagraph (B).
17 (w) For tax years beginning after December 31, 2011,
18 eliminate all of the following:
19 (i) Income from producing oil and gas to the extent included
20 in adjusted gross income.
21 (ii) Expenses of producing oil and gas to the extent deducted
22 in arriving at adjusted gross income.
23 (2) Except as otherwise provided in subsection (7), a
24 personal exemption of $3,700.00 multiplied by the number of
25 personal or dependency exemptions allowable on the taxpayer's
26 federal income tax return pursuant to the internal revenue code
27 shall be subtracted in the calculation that determines taxable
1 income.
2 (3) Except as otherwise provided in subsection (7), a single
3 additional exemption determined as follows shall be subtracted in
4 the calculation that determines taxable income in each of the
5 following circumstances:
6 (a) $1,800.00 for each taxpayer and every dependent of the
7 taxpayer who is a deaf person as defined in section 2 of the deaf
8 persons' interpreters act, 1982 PA 204, MCL 393.502; a
9 paraplegic, a quadriplegic, or a hemiplegic; a person who is
10 blind as defined in section 504; or a person who is totally and
11 permanently disabled as defined in section 522. When a dependent
12 of a taxpayer files an annual return under this part, the
13 taxpayer or dependent of the taxpayer, but not both, may claim
14 the additional exemption allowed under this subdivision. As used
15 in this subdivision, "dependent" means that term as defined in
16 section 30e.
17 (b) For tax years beginning after 2007, $250.00 for each
18 taxpayer and every dependent of the taxpayer who is a qualified
19 disabled veteran. When a dependent of a taxpayer files an annual
20 return under this part, the taxpayer or dependent of the
21 taxpayer, but not both, may claim the additional exemption
22 allowed under this subdivision. As used in this subdivision:
23 (i) "Qualified disabled veteran" means a veteran with a
24 service-connected disability.
25 (ii) "Service-connected disability" means a disability
26 incurred or aggravated in the line of duty in the active
27 military, naval, or air service as described in 38 USC 101(16).
1 (iii) "Veteran" means a person who served in the active
2 military, naval, marine, coast guard, or air service and who was
3 discharged or released from his or her service with an honorable
4 or general discharge.
5 (4) An individual with respect to whom a deduction under
6 section 151 of the internal revenue code is allowable to another
7 federal taxpayer during the tax year is not considered to have an
8 allowable federal exemption for purposes of subsection (2), but
9 may subtract $1,500.00 in the calculation that determines taxable
10 income for a tax year.
11 (5) A nonresident or a part-year resident is allowed that
12 proportion of an exemption or deduction allowed under subsection
13 (2), (3), or (4) that the taxpayer's portion of adjusted gross
14 income from Michigan sources bears to the taxpayer's total
15 adjusted gross income.
16 (6) In calculating taxable income, a taxpayer shall not
17 subtract from adjusted gross income the amount of prizes won by
18 the taxpayer under the McCauley-Traxler-Law-Bowman-McNeely
19 lottery act, 1972 PA 239, MCL 432.1 to 432.47.
20 (7) For each tax year beginning on and after January 1,
21 2013, the personal exemption allowed under subsection (2) shall
22 be adjusted by multiplying the exemption for the tax year
23 beginning in 2012 by a fraction, the numerator of which is the
24 United States consumer price index for the state fiscal year
25 ending in the tax year prior to the tax year for which the
26 adjustment is being made and the denominator of which is the
27 United States consumer price index for the 2010-2011 state fiscal
1 year. The resultant product shall be rounded to the nearest
2 $100.00 increment. As used in this section, "United States
3 consumer price index" means the United States consumer price
4 index for all urban consumers as defined and reported by the
5 United States department of labor, bureau of labor statistics.
6 For each tax year, the exemptions allowed under subsection (3)
7 shall be adjusted by multiplying the exemption amount under
8 subsection (3) for the tax year by a fraction, the numerator of
9 which is the United States consumer price index for the state
10 fiscal year ending the tax year prior to the tax year for which
11 the adjustment is being made and the denominator of which is the
12 United States consumer price index for the 1998-1999 state fiscal
13 year. The resultant product shall be rounded to the nearest
14 $100.00 increment.
15 (8) As used in subsection (1)(f), "retirement or pension
16 benefits" means distributions from all of the following:
17 (a) Except as provided in subdivision (d), qualified pension
18 trusts and annuity plans that qualify under section 401(a) of the
19 internal revenue code, including all of the following:
20 (i) Plans for self-employed persons, commonly known as Keogh
21 or HR10 plans.
22 (ii) Individual retirement accounts that qualify under
23 section 408 of the internal revenue code if the distributions are
24 not made until the participant has reached 59-1/2 years of age,
25 except in the case of death, disability, or distributions
26 described by section 72(t)(2)(A)(iv) of the internal revenue code.
27 (iii) Employee annuities or tax-sheltered annuities purchased
1 under section 403(b) of the internal revenue code by
2 organizations exempt under section 501(c)(3) of the internal
3 revenue code, or by public school systems.
4 (iv) Distributions from a 401(k) plan attributable to
5 employee contributions mandated by the plan or attributable to
6 employer contributions.
7 (b) The following retirement and pension plans not qualified
8 under the internal revenue code:
9 (i) Plans of the United States, state governments other than
10 this state, and political subdivisions, agencies, or
11 instrumentalities of this state.
12 (ii) Plans maintained by a church or a convention or
13 association of churches.
14 (iii) All other unqualified pension plans that prescribe
15 eligibility for retirement and predetermine contributions and
16 benefits if the distributions are made from a pension trust.
17 (c) Retirement or pension benefits received by a surviving
18 spouse if those benefits qualified for a deduction prior to the
19 decedent's death. Benefits received by a surviving child are not
20 deductible.
21 (d) Retirement and pension benefits do not include:
22 (i) Amounts received from a plan that allows the employee to
23 set the amount of compensation to be deferred and does not
24 prescribe retirement age or years of service. These plans
25 include, but are not limited to, all of the following:
26 (A) Deferred compensation plans under section 457 of the
27 internal revenue code.
1 (B) Distributions from plans under section 401(k) of the
2 internal revenue code other than plans described in subdivision
3 (a)(iv).
4 (C) Distributions from plans under section 403(b) of the
5 internal revenue code other than plans described in subdivision
6 (a)(iii).
7 (ii) Premature distributions paid on separation, withdrawal,
8 or discontinuance of a plan prior to the earliest date the
9 recipient could have retired under the provisions of the plan.
10 (iii) Payments received as an incentive to retire early unless
11 the distributions are from a pension trust.
12 (9) In determining taxable income under this section, the
13 following limitations and restrictions apply:
14 (a) For a person born before 1946, this subsection provides
15 no additional restrictions or limitations under subsection
16 (1)(f).
17 (b) Except as otherwise provided in subdivision (c), for a
18 person born in 1946 through 1952, the sum of the deductions under
19 subsection (1)(f)(i), (ii), and (iv) is limited to $20,000.00 for a
20 single return and $40,000.00 for a joint return. After that
21 person reaches the age of 67, the deductions under subsection
22 (1)(f)(i), (ii), and (iv) do not apply and that person is eligible
23 for a deduction of $20,000.00 for a single return and $40,000.00
24 for a joint return, which deduction is available against all
25 types of income and is not restricted to income from retirement
26 or pension benefits. A person that takes the deduction under
27 subsection (1)(e) is not eligible for the unrestricted deduction
1 of $20,000.00 for a single return and $40,000.00 for a joint
2 return under this subdivision.
3 (c) Beginning January 1, 2013, for a person born in 1946
4 through 1952 who receives retirement or pension benefits from
5 employment with a governmental agency that was not covered by the
6 federal social security act, chapter 531, 49 Stat. 620, the sum
7 of the deductions under subsection (1)(f)(i), (ii), and
(iv) is
8 limited to $35,000.00 for a single return and, except as
9 otherwise provided under this subdivision, $55,000.00 for a joint
10 return. If both the husband and wife filing a joint return
11 receive retirement or pension benefits from employment with a
12 governmental agency that was not covered by the federal social
13 security act, chapter 531, 49 Stat. 620, the sum of the
14 deductions under subsection (1)(f)(i), (ii), and
(iv) is limited to
15 $70,000.00 for a joint return. After that person reaches the age
16 of 67, the deductions under subsection (1)(f)(i), (ii), and
(iv) do
17 not apply and that person is eligible for a deduction of
18 $35,000.00 for a single return and $55,000.00 for a joint return,
19 or $70,000.00 for a joint return if applicable, which deduction
20 is available against all types of income and is not restricted to
21 income from retirement or pension benefits. A person who takes
22 the deduction under subsection (1)(e) is not eligible for the
23 unrestricted deduction of $35,000.00 for a single return and
24 $55,000.00 for a joint return, or $70,000.00 for a joint return
25 if applicable, under this subdivision.
26 (d) For a person born after 1952 who has reached the age of
27 62 through 66 years of age and who receives retirement or pension
1 benefits from employment with a governmental agency that was not
2 covered by the federal social security act, chapter 532, 49 Stat.
3 620, the sum of the deductions under subsection (1)(f)(i), (ii),
4 and (iv) is
limited to $15,000.00 for a single return and, except
5 as otherwise provided under this subdivision, $15,000.00 for a
6 joint return. If both the husband and the wife filing a joint
7 return receive retirement or pension benefits from employment
8 with a governmental agency that was not covered by the federal
9 social security act, chapter 532, 49 Stat. 620, the sum of the
10 deductions under subsection (1)(f)(i), (ii), and
(iv) is limited to
11 $30,000.00 for a joint return.
12 (e) Except as otherwise provided under subdivision (d), for
13 a person born after 1952, the deduction under subsection
14 (1)(f)(i), (ii), or (iv) does not apply. When that person reaches
15 the age of 67, that person is eligible for a deduction of
16 $20,000.00 for a single return and $40,000.00 for a joint return,
17 which deduction is available against all types of income and is
18 not restricted to income from retirement or pension benefits. If
19 a person takes the deduction of $20,000.00 for a single return
20 and $40,000.00 for a joint return, that person shall not take the
21 deduction under subsection (1)(f)(iii) and shall not take the
22 personal exemption under subsection (2). That person may elect
23 not to take the deduction of $20,000.00 for a single return and
24 $40,000.00 for a joint return and elect to take the deduction
25 under subsection (1)(f)(iii) and
the personal exemption under
26 subsection (2) if that election would reduce that person's tax
27 liability. A person that takes the deduction under subsection
1 (1)(e) is not eligible for the unrestricted deduction of
2 $20,000.00 for a single return and $40,000.00 for a joint return
3 under this subdivision.
4 (f) For a joint return, the limitations and restrictions in
5 this subsection shall be applied based on the age of the older
6 spouse filing the joint return.
7 (9) (10) As
used in this section, "oil and gas" means oil
8 and gas that is subject to severance tax under 1929 PA 48, MCL
9 205.301 to 205.317.
10 Sec. 520. (1) Subject to the limitations and the definitions
11 in this chapter, a claimant may claim against the tax due under
12 this part for the tax year a credit for the property taxes on the
13 taxpayer's homestead deductible for federal income tax purposes
14 pursuant to section 164 of the internal revenue code, or that
15 would have been deductible if the claimant had not elected the
16 zero bracket amount or if the claimant had been subject to the
17 federal income tax. The property taxes used for the credit
18 computation shall not be greater than the amount levied for 1 tax
19 year. An owner is not eligible for a credit under this section if
20 the taxable value of his or her homestead excluding the portion
21 of a parcel of real property that is unoccupied and classified as
22 agricultural for ad valorem tax purposes in the year for which
23 the credit is claimed is greater than $135,000.00. As used in
24 this subsection, "taxable value" means that value determined
25 under section 27a of the general property tax act, 1893 PA 206,
26 MCL 211.27a.
27 (2) A person who rents or leases a homestead may claim a
1 similar credit computed under this section and section 522 based
2 upon 17% of the gross rent paid for tax years before the 1994 tax
3 year, or 20% of the gross rent paid for tax years after the 1993
4 tax year. A person who rents or leases a homestead subject to a
5 service charge in lieu of ad valorem taxes as provided by section
6 15a of the state housing development authority act of 1966, 1966
7 PA 346, MCL 125.1415a, may claim a similar credit computed under
8 this section and section 522 based upon 10% of the gross rent
9 paid.
10 (3) If the credit claimed under this section and section 522
11 exceeds the tax liability for the tax year or if there is no tax
12 liability for the tax year, the amount of the claim not used as
13 an offset against the tax liability shall, after examination and
14 review, be approved for payment, without interest, to the
15 claimant. In determining the amount of the payment under this
16 subsection, withholdings and other credits shall be used first to
17 offset any tax liabilities.
18 (4) If the homestead is an integral part of a multipurpose
19 or multidwelling building that is federally aided housing or
20 state aided housing, a claimant who is a senior citizen entitled
21 to a payment under subsection (2) may assign the right to that
22 payment to a mortgagor if the mortgagor reduces the rent charged
23 and collected on the claimant's homestead in an amount equal to
24 the tax credit payment provided in this chapter. The assignment
25 of the claim is valid only if the Michigan state housing
26 development authority, by affidavit, verifies that the claimant's
27 rent has been so reduced.
1 (5) Only the renter or lessee shall claim a credit on
2 property that is rented or leased as a homestead.
3 (6) A person who discriminates in the charging or collection
4 of rent on a homestead by increasing the rent charged or
5 collected because the renter or lessee claims and receives a
6 credit or payment under this chapter is guilty of a misdemeanor.
7 Discrimination against a renter who claims and receives the
8 credit under this section and section 522 by a reduction of the
9 rent on the homestead of a person who does not claim and receive
10 the credit is a misdemeanor. If discriminatory rents are charged
11 or collected, each charge or collection of the higher or lower
12 payment is a separate offense. Each acceptance of a payment of
13 rent is a separate offense.
14 (7) A person who received aid to families with dependent
15 children, state family assistance, or state disability assistance
16 pursuant to the social welfare act, 1939 PA 280, MCL 400.1 to
17 400.119b, in the tax year for which the person is filing a return
18 shall have a credit that is authorized and computed under this
19 section and section 522 reduced by an amount equal to the product
20 of the claimant's credit multiplied by the quotient of the sum of
21 the claimant's aid to families with dependent children, state
22 family assistance, and state disability assistance for the tax
23 year divided by the claimant's total household resources. The
24 reduction of credit shall not exceed the sum of the aid to
25 families with dependent children, state family assistance, and
26 state disability assistance for the tax year. For the purposes of
27 this subsection, aid to families with dependent children does not
1 include child support payments that offset or reduce payments
2 made to the claimant.
3 (8) A credit under subsection (1) or (2) shall be reduced by
4 10% for each claimant whose total household resources exceed
5 $41,000.00 $73,650.00
and by an additional 10% for each
increment
6 of $1,000.00 of total household resources in excess of
7 $41,000.00.$73,650.00.
8 (9) If the credit authorized and calculated under this
9 section and section 522 and adjusted under subsection (7) or (8)
10 does not provide to a senior citizen who rents or leases a
11 homestead that amount attributable to rent that constitutes more
12 than 40% of the total household resources of the senior citizen,
13 the senior citizen may claim a credit based upon the amount of
14 total household resources attributable to rent as provided by
15 this section.
16 (10) A senior citizen whose gross rent paid for the tax year
17 is more than the percentage of total household resources
18 specified in subsection (9) for the respective tax year may claim
19 a credit for the amount of rent paid that constitutes more than
20 the percentage of the total household resources of the senior
21 citizen specified in subsection (9) and that was not provided to
22 the senior citizen by the credit computed pursuant to this
23 section and section 522 and adjusted pursuant to subsection (7)
24 or (8).
25 (11) The department may promulgate rules to implement
26 subsections (9) to (15) and may prescribe a table to allow a
27 claimant to determine the credit provided under this section and
1 section 522 in the instruction booklet that accompanies the
2 respective income tax or property tax credit forms used by
3 claimants.
4 (12) A senior citizen may claim the credit under subsections
5 (9) to (15) on the same form as the property tax credit permitted
6 by subsection (2). The department shall adjust the forms
7 accordingly.
8 (13) A senior citizen who moves to a different rented or
9 leased homestead shall determine, for 2 tax years after the move,
10 both his or her qualification to claim a credit under subsections
11 (9) to (15) and the amount of a credit under subsections (9) to
12 (15) on the basis of the annualized final monthly rental payment
13 at his or her previous homestead, if this annualized rental is
14 less than the senior citizen's actual annual rental payments.
15 (14) For a return of less than 12 months, the claim for a
16 credit under subsections (9) to (15) shall be reduced
17 proportionately.
18 (15) The total credit allowed by this section and section
19 522 shall not exceed $1,200.00 per year.
20 Sec. 522. (1) The amount of a claim made pursuant to this
21 chapter shall be determined as follows:
22 (a) A claimant who is not a senior citizen is entitled to
a
23 credit against the state income tax liability under this part
24 equal to 60% of the amount by which the property taxes on the
25 homestead, or the credit for rental of the homestead for the tax
26 year, exceeds 3.5% of the claimant's total household resources
27 for that tax year.
1 (b) A claimant who is a senior citizen is entitled to a
2 credit against the state income tax liability under this part
3 equal to the following:
4 (i) For a
claimant with total household resources of
5 $21,000.00 or less, an amount as determined in accordance with
6 subdivision (c).
7 (ii) For
a claimant with total household resources of more
8 than $21,000.00 and less than or equal to $22,000.00, an amount
9 equal to 96% of the difference between the property taxes on the
10 homestead or the credit for rental of the homestead for the tax
11 year and 3.5% of total household resources.
12 (iii) For
a claimant with total household resources of more
13 than $22,000.00 and less than or equal to $23,000.00, an amount
14 equal to 92% of the difference between the property taxes on the
15 homestead or the credit for rental of the homestead for the tax
16 year and 3.5% of total household resources.
17 (iv) For
a claimant with total household resources of more
18 than $23,000.00 and less than or equal to $24,000.00, an amount
19 equal to 88% of the difference between the property taxes on the
20 homestead or the credit for rental of the homestead for the tax
21 year and 3.5% of total household resources.
22 (v) For a
claimant with total household resources of more
23 than $24,000.00 and less than or equal to $25,000.00, an amount
24 equal to 84% of the difference between the property taxes on the
25 homestead or the credit for rental of the homestead for the tax
26 year and 3.5% of total household resources.
27 (vi) For
a claimant with total household resources of more
1 than $25,000.00 and less than or equal to $26,000.00, an amount
2 equal to 80% of the difference between the property taxes on the
3 homestead or the credit for rental of the homestead for the tax
4 year and 3.5% of total household resources.
5 (vii) For
a claimant with total household resources of more
6 than $26,000.00 and less than or equal to $27,000.00, an amount
7 equal to 76% of the difference between the property taxes on the
8 homestead or the credit for rental of the homestead for the tax
9 year and 3.5% of total household resources.
10 (viii) For
a claimant with total household resources of more
11 than $27,000.00 and less than or equal to $28,000.00, an amount
12 equal to 72% of the difference between the property taxes on the
13 homestead or the credit for rental of the homestead for the tax
14 year and 3.5% of total household resources.
15 (ix) For
a claimant with total household resources of more
16 than $28,000.00 and less than or equal to $29,000.00, an amount
17 equal to 68% of the difference between the property taxes on the
18 homestead or the credit for rental of the homestead for the tax
19 year and 3.5% of total household resources.
20 (x) For a
claimant with total household resources of more
21 than $29,000.00 and less than or equal to $30,000.00, an amount
22 equal to 64% of the difference between the property taxes on the
23 homestead or the credit for rental of the homestead for the tax
24 year and 3.5% of total household resources.
25 (xi) For
a claimant with total household resources of more
26 than $30,000.00, an amount equal to 60% of the difference between
27 the property taxes on the homestead or the credit for rental of
1 the homestead for the tax year and 3.5% of total household
2 resources.
3 (b) (c) A
claimant who is a senior citizen with total
4 household resources of $21,000.00 or less or a paraplegic,
5 hemiplegic, or quadriplegic and for tax years that begin after
6 December 31, 1999, a claimant who is totally and permanently
7 disabled, deaf, or, for tax years that begin after December 31,
8 2012, blind is entitled to a credit against the state income tax
9 liability for the amount by which the property taxes on the
10 homestead, the credit for rental of the homestead, or a service
11 charge in lieu of ad valorem taxes as provided by section 15a of
12 the state housing development authority act of 1966, 1966 PA 346,
13 MCL 125.1415a, for the tax year exceeds the percentage of the
14 claimant's total household resources for that tax year computed
15 as follows:
16 Total household resources Percentage
17 Not over $3,000.00 .0%
18 Over $3,000.00 but not over $4,000.00 1.0%
19 Over $4,000.00 but not over $5,000.00 2.0%
20 Over $5,000.00 but not over $6,000.00 3.0%
21 Over $6,000.00 3.5%
22 (c) (d) A
claimant who is an eligible serviceperson,
23 eligible veteran, or eligible widow or widower is entitled to a
24 credit against the state income tax liability for a percentage of
25 the property taxes on the homestead for the tax year not in
26 excess of 100% determined as follows:
1 (i) Divide the taxable value allowance specified in section
2 506 by the taxable value of the homestead or, if the eligible
3 serviceperson, eligible veteran, or eligible widow or widower
4 leases or rents a homestead, divide 17% of the total annual rent
5 paid for tax years before the 1994 tax year, or 20% of the total
6 annual rent paid for tax years after the 1993 tax year on the
7 property by the property tax rate on the property.
8 (ii) Multiply the property taxes on the homestead by the
9 percentage computed in subparagraph (i).
10 (d) (e) A
claimant who is blind is entitled to a credit
11 against the state income tax liability for a percentage of the
12 property taxes on the homestead for the tax year determined as
13 follows:
14 (i) If the taxable value of the homestead is $3,500.00 or
15 less, 100% of the property taxes.
16 (ii) If the taxable value of the homestead is more than
17 $3,500.00, the percentage that $3,500.00 bears to the taxable
18 value of the homestead.
19 (2) A person who is qualified to make a claim under more
20 than 1 classification shall elect the classification under which
21 the claim is made.
22 (3) Only 1 claimant per household for a tax year is entitled
23 to the credit, unless both the husband and wife filing a joint
24 return are blind, then each shall be considered a claimant.
25 (4) As used in this section, "totally and permanently
26 disabled" means disability as defined in section 216 of title II
27 of the social security act, 42 USC 416.
1 (5) A senior citizen who has total household resources for
2 the tax year of $6,000.00 or less and who for 1973 received a
3 senior citizen homestead exemption under former section 7c of the
4 general property tax act, 1893 PA 206, may compute the credit
5 against the state income tax liability for a percentage of the
6 property taxes on the homestead for the tax year determined as
7 follows:
8 (a) If the taxable value of the homestead is $2,500.00 or
9 less, 100% of the property taxes.
10 (b) If the taxable value of the homestead is more than
11 $2,500.00, the percentage that $2,500.00 bears to the taxable
12 value of the homestead.
13 (6) For a return of less than 12 months, the claim shall be
14 reduced proportionately.
15 (7) The department may prescribe tables that may be used to
16 determine the amount of the claim.
17 (8) The total credit allowed in this section for each year
18 after December 31, 1975 shall not exceed $1,200.00 per year.
19 (9) The total credit allowable under this part and part 361
20 of the natural resources and environmental protection act, 1994
21 PA 451, MCL 324.36101 to 324.36117, shall not exceed the total
22 property tax due and payable by the claimant in that year. The
23 amount by which the credit exceeds the property tax due and
24 payable shall be deducted from the credit claimed under part 361
25 of the natural resources and environmental protection act, 1994
26 PA 451, MCL 324.36101 to 324.36117.