LANSING, Michigan (WLUC) — Governor Gretchen Whitmer and Democratic state leaders rolled out their tax cut plan Monday morning.
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Dubbed the “Reduce MI Cost Plan,” it would roll back retirement taxes, increase a tax credit, and deliver inflation checks to every taxpayer. It comes as the state’s budget surplus is expected to reach $9.2 billion next fall.
The Whitmer administration says it would be the largest tax cut for Michigan residents in decades.
Checks for inflation relief
The plan provides $180 inflation relief checks to every Michigan tax claimant, providing immediate relief by putting money back in pockets. Makes sure everyone gets some help and builds on help for working families and seniors.
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“We know that prices are rising and everyone is feeling the pressure. Those extra pennies per grocery item add up and it affects all Michiganders, regardless of income,” Senate Majority Leader Winnie Brinks said.
The plan eliminates the pension tax over four years and ultimately puts an average of $1,000 back into the pockets of 500,000 households. Reducing MI costs will equalize the exemption on both public and private pensions.
Tax credit for working families
The plan quintuples the Michigan Working Families Tax Credit match of the federal Earned Income Tax Credit (EITC) to 30%, up from 6%. It brings in an average combined tax refund of $3,150 to 700,000 families, directly impacting nearly one million children — nearly half of Michigan’s children. By reducing MI costs, this boost is retroactive to tax year 2022, meaning families will have more money in their pockets this year.
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“The #1 concern for Michiganders right now is cost,” Governor Whitmer said in a statement. “Our plan for reducing MI costs will get people cash back by rolling back pension taxes, quintupling the tax credit for working families, and providing every taxpayer with inflation checks. Getting this done will help people pay the bills and put food on the table as inflation affects their monthly budgets. I am proud that we are rushing to get this done and bring real, immediate help to Michiganders.
“House Democrats heard from Michiganders in our state that they want us to repeal the retirement tax,” Chairman Joe Tate said in a statement. “Their priorities are our priorities. With the approval of this plan, we are fulfilling our promise to the people of Michigan. Reducing MI costs gives retirees their hard-earned money back, puts dollars in the hands of working families, and provides much-needed inflation relief for people in our state. This is a meaningful relief at a time when Michiganders really need it. I am proud of my colleagues in both chambers and of the governor for her leadership in making this happen.”
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“This announcement is a hugely exciting moment for Michigan,” Brinks said. “It contains important promises that Democrats have been talking about for years in coffee shops and town halls and among our neighbors. It reflects what we’ve heard from Michiganders and what we’ve been working on: cutting costs, fighting inflation, and providing real, immediate relief to the people of our state.
Meanwhile, Republican state representative Greg Markkanen would like to see more efforts for tax relief.
“I think we need tax relief across the board, not just for the public sector, but also for the private sector. We’d love to get together with the governor’s office and look across the aisle to work out a plan that gives all of Michigander’s tax relief, not just a certain segment of the population,” Markkanen said.
Markkanen said more tax cuts would benefit UP residents
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“We have higher costs here; we have people traveling many miles for work and gas prices are still very high. People need that tax break. Just handing someone a check is a half-baked plan in my opinion,” Markkanen said.
The plan for cutting MI costs must be approved by the Democrat-led House and Senate, which could happen this week.