Bill Text: MI HB4991 | 2017-2018 | 99th Legislature | Engrossed
Bill Title: Individual income tax; exemptions; compensation received for wrongful imprisonment; exempt from taxable income and total household resources under the homestead property tax credit. Amends secs. 30 & 508 of 1967 PA 281 (MCL 206.30 & 206.508).
Spectrum: Partisan Bill (Republican 1-0)
Status: (Passed) 2018-12-31 - Assigned Pa 588'18 With Immediate Effect [HB4991 Detail]
Download: Michigan-2017-HB4991-Engrossed.html
HB-4991, As Passed Senate, December 20, 2018
SENATE SUBSTITUTE FOR
HOUSE BILL NO. 4991
A bill to amend 1967 PA 281, entitled
"Income tax act of 1967,"
by amending sections 30, 51, 51d, and 508 (MCL 206.30, 206.51,
206.51d, and 206.508), section 30 as amended by 2018 PA 38, section
51 as amended by 2016 PA 266, section 51d as added by 2015 PA 179,
and section 508 as amended by 2011 PA 177, and by adding section
51g.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 30. (1) "Taxable income" means, for a person other than a
corporation, estate, or trust, adjusted gross income as defined in
the internal revenue code subject to the following adjustments
under this section:
(a) Add gross interest income and dividends derived from
obligations or securities of states other than Michigan, in the
same amount that has been excluded from adjusted gross income less
related expenses not deducted in computing adjusted gross income
because of section 265(a)(1) of the internal revenue code.
(b) Add taxes on or measured by income to the extent the taxes
have been deducted in arriving at adjusted gross income.
(c) Add losses on the sale or exchange of obligations of the
United States government, the income of which this state is
prohibited from subjecting to a net income tax, to the extent that
the loss has been deducted in arriving at adjusted gross income.
(d) Deduct, to the extent included in adjusted gross income,
income derived from obligations, or the sale or exchange of
obligations, of the United States government that this state is
prohibited by law from subjecting to a net income tax, reduced by
any interest on indebtedness incurred in carrying the obligations
and by any expenses incurred in the production of that income to
the extent that the expenses, including amortizable bond premiums,
were deducted in arriving at adjusted gross income.
(e) Deduct, to the extent included in adjusted gross income,
the following:
(i) Compensation, including retirement or pension benefits,
received for services in the Armed Forces of the United States.
(ii) Retirement or pension benefits under the railroad
retirement act of 1974, 45 USC 231 to 231v.
(iii) Beginning January 1, 2012, retirement or pension
benefits received for services in the Michigan National Guard.
(f) Deduct the following to the extent included in adjusted
gross income subject to the limitations and restrictions set forth
in subsection (9):
(i) Retirement or pension benefits received from a federal
public retirement system or from a public retirement system of or
created by this state or a political subdivision of this state.
(ii) Retirement or pension benefits received from a public
retirement system of or created by another state or any of its
political subdivisions if the income tax laws of the other state
permit a similar deduction or exemption or a reciprocal deduction
or exemption of a retirement or pension benefit received from a
public retirement system of or created by this state or any of the
political subdivisions of this state.
(iii) Social Security benefits as defined in section 86 of the
internal revenue code.
(iv) Beginning on and after January 1, 2007, retirement or
pension benefits not deductible under subparagraph (i) or
subdivision (e) from any other retirement or pension system or
benefits from a retirement annuity policy in which payments are
made for life to a senior citizen, to a maximum of $42,240.00 for a
single return and $84,480.00 for a joint return. The maximum
amounts allowed under this subparagraph shall be reduced by the
amount of the deduction for retirement or pension benefits claimed
under subparagraph (i) or subdivision (e) and by the amount of a
deduction claimed under subdivision (p). For the 2008 tax year and
each tax year after 2008, the maximum amounts allowed under this
subparagraph shall be adjusted by the percentage increase in the
United States Consumer Price Index for the immediately preceding
calendar year. The department shall annualize the amounts provided
in this subparagraph as necessary. As used in this subparagraph,
"senior citizen" means that term as defined in section 514.
(v) The amount determined to be the section 22 amount eligible
for the elderly and the permanently and totally disabled credit
provided in section 22 of the internal revenue code.
(g) Adjustments resulting from the application of section 271.
(h) Adjustments with respect to estate and trust income as
provided in section 36.
(i) Adjustments resulting from the allocation and
apportionment provisions of chapter 3.
(j) Deduct the following payments made by the taxpayer in the
tax year:
(i) For the 2010 tax year and each tax year after 2010, the
amount of a charitable contribution made to the advance tuition
payment fund created under section 9 of the Michigan education
trust act, 1986 PA 316, MCL 390.1429.
(ii) The amount of payment made under an advance tuition
payment contract as provided in the Michigan education trust act,
1986 PA 316, MCL 390.1421 to 390.1442.
(iii) The amount of payment made under a contract with a
private sector investment manager that meets all of the following
criteria:
(A) The contract is certified and approved by the board of
directors of the Michigan education trust to provide equivalent
benefits and rights to purchasers and beneficiaries as an advance
tuition payment contract as described in subparagraph (ii).
(B) The contract applies only for a state institution of
higher education as defined in the Michigan education trust act,
1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior
college in Michigan.
(C) The contract provides for enrollment by the contract's
qualified beneficiary in not less than 4 years after the date on
which the contract is entered into.
(D) The contract is entered into after either of the
following:
(I) The purchaser has had his or her offer to enter into an
advance tuition payment contract rejected by the board of directors
of the Michigan education trust, if the board determines that the
trust cannot accept an unlimited number of enrollees upon an
actuarially sound basis.
(II) The board of directors of the Michigan education trust
determines that the trust can accept an unlimited number of
enrollees upon an actuarially sound basis.
(k) If an advance tuition payment contract under the Michigan
education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, or
another contract for which the payment was deductible under
subdivision (j) is terminated and the qualified beneficiary under
that contract does not attend a university, college, junior or
community college, or other institution of higher education, add
the amount of a refund received by the taxpayer as a result of that
termination or the amount of the deduction taken under subdivision
(j) for payment made under that contract, whichever is less.
(l) Deduct from the taxable income of a purchaser the amount
included as income to the purchaser under the internal revenue code
after the advance tuition payment contract entered into under the
Michigan education trust act, 1986 PA 316, MCL 390.1421 to
390.1442, is terminated because the qualified beneficiary attends
an institution of postsecondary education other than either a state
institution of higher education or an institution of postsecondary
education located outside this state with which a state institution
of higher education has reciprocity.
(m) Add, to the extent deducted in determining adjusted gross
income, the net operating loss deduction under section 172 of the
internal revenue code.
(n) Deduct a net operating loss deduction for the taxable year
as determined under section 172 of the internal revenue code
subject to the modifications under section 172(b)(2) of the
internal revenue code and subject to the allocation and
apportionment provisions of chapter 3 of this part for the taxable
year in which the loss was incurred.
(o) Deduct, to the extent included in adjusted gross income,
benefits from a discriminatory self-insurance medical expense
reimbursement plan.
(p) Beginning on and after January 1, 2007, subject to any
limitation provided in this subdivision, a taxpayer who is a senior
citizen may deduct to the extent included in adjusted gross income,
interest, dividends, and capital gains received in the tax year not
to exceed $9,420.00 for a single return and $18,840.00 for a joint
return. The maximum amounts allowed under this subdivision shall be
reduced by the amount of a deduction claimed for retirement or
pension benefits under subdivision (e) or a deduction claimed under
subdivision (f)(i), (ii), (iv), or (v). For the 2008 tax year and
each tax year after 2008, the maximum amounts allowed under this
subdivision shall be adjusted by the percentage increase in the
United States Consumer Price Index for the immediately preceding
calendar year. The department shall annualize the amounts provided
in this subdivision as necessary. Beginning January 1, 2012, the
deduction under this subdivision is not available to a senior
citizen born after 1945. As used in this subdivision, "senior
citizen" means that term as defined in section 514.
(q) Deduct, to the extent included in adjusted gross income,
all of the following:
(i) The amount of a refund received in the tax year based on
taxes paid under this part.
(ii) The amount of a refund received in the tax year based on
taxes paid under the city income tax act, 1964 PA 284, MCL 141.501
to 141.787.
(iii) The amount of a credit received in the tax year based on
a claim filed under sections 520 and 522 to the extent that the
taxes used to calculate the credit were not used to reduce adjusted
gross income for a prior year.
(r) Add the amount paid by the state on behalf of the taxpayer
in the tax year to repay the outstanding principal on a loan taken
on which the taxpayer defaulted that was to fund an advance tuition
payment contract entered into under the Michigan education trust
act, 1986 PA 316, MCL 390.1421 to 390.1442, if the cost of the
advance tuition payment contract was deducted under subdivision (j)
and was financed with a Michigan education trust secured loan.
(s) Deduct, to the extent included in adjusted gross income,
any amount, and any interest earned on that amount, received in the
tax year by a taxpayer who is a Holocaust victim as a result of a
settlement of claims against any entity or individual for any
recovered asset pursuant to the German act regulating unresolved
property claims, also known as Gesetz zur Regelung offener
Vermogensfragen, as a result of the settlement of the action
entitled In re: Holocaust victim assets litigation, CV-96-4849, CV-
96-5161, and CV-97-0461 (E.D. NY), or as a result of any similar
action if the income and interest are not commingled in any way
with and are kept separate from all other funds and assets of the
taxpayer. As used in this subdivision:
(i) "Holocaust victim" means a person, or the heir or
beneficiary of that person, who was persecuted by Nazi Germany or
any Axis regime during any period from 1933 to 1945.
(ii) "Recovered asset" means any asset of any type and any
interest earned on that asset including, but not limited to, bank
deposits, insurance proceeds, or artwork owned by a Holocaust
victim during the period from 1920 to 1945, withheld from that
Holocaust victim from and after 1945, and not recovered, returned,
or otherwise compensated to the Holocaust victim until after 1993.
(t) Deduct all of the following:
(i) To the extent not deducted in determining adjusted gross
income, contributions made by the taxpayer in the tax year less
qualified withdrawals made in the tax year from education savings
accounts, calculated on a per education savings account basis,
pursuant to the Michigan education savings program act, 2000 PA
161, MCL 390.1471 to 390.1486, not to exceed a total deduction of
$5,000.00 for a single return or $10,000.00 for a joint return per
tax year. The amount calculated under this subparagraph for each
education savings account shall not be less than zero.
(ii) To the extent included in adjusted gross income, interest
earned in the tax year on the contributions to the taxpayer's
education savings accounts if the contributions were deductible
under subparagraph (i).
(iii) To the extent included in adjusted gross income,
distributions that are qualified withdrawals from an education
savings account to the designated beneficiary of that education
savings account.
(u) Add, to the extent not included in adjusted gross income,
the amount of money withdrawn by the taxpayer in the tax year from
education savings accounts, not to exceed the total amount deducted
under subdivision (t) in the tax year and all previous tax years,
if the withdrawal was not a qualified withdrawal as provided in the
Michigan education savings program act, 2000 PA 161, MCL 390.1471
to 390.1486. This subdivision does not apply to withdrawals that
are less than the sum of all contributions made to an education
savings account in all previous tax years for which no deduction
was claimed under subdivision (t), less any contributions for which
no deduction was claimed under subdivision (t) that were withdrawn
in all previous tax years.
(v) A taxpayer who is a resident tribal member may deduct, to
the extent included in adjusted gross income, all nonbusiness
income earned or received in the tax year and during the period in
which an agreement entered into between the taxpayer's tribe and
this state pursuant to section 30c of 1941 PA 122, MCL 205.30c, is
in full force and effect. As used in this subdivision:
(i) "Business income" means business income as defined in
section 4 and apportioned under chapter 3.
(ii) "Nonbusiness income" means nonbusiness income as defined
in section 14 and, to the extent not included in business income,
all of the following:
(A) All income derived from wages whether the wages are earned
within the agreement area or outside of the agreement area.
(B) All interest and passive dividends.
(C) All rents and royalties derived from real property located
within the agreement area.
(D) All rents and royalties derived from tangible personal
property, to the extent the personal property is utilized within
the agreement area.
(E) Capital gains from the sale or exchange of real property
located within the agreement area.
(F) Capital gains from the sale or exchange of tangible
personal property located within the agreement area at the time of
sale.
(G) Capital gains from the sale or exchange of intangible
personal property.
(H) All pension income and benefits including, but not limited
to, distributions from a 401(k) plan, individual retirement
accounts under section 408 of the internal revenue code, or a
defined contribution plan, or payments from a defined benefit plan.
(I) All per capita payments by the tribe to resident tribal
members, without regard to the source of payment.
(J) All gaming winnings.
(iii) "Resident tribal member" means an individual who meets
all of the following criteria:
(A) Is an enrolled member of a federally recognized tribe.
(B) The individual's tribe has an agreement with this state
pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in
full force and effect.
(C) The individual's principal place of residence is located
within the agreement area as designated in the agreement under sub-
subparagraph (B).
(w) For tax years beginning after December 31, 2011, eliminate
all of the following:
(i) Income from producing oil and gas to the extent included
in adjusted gross income.
(ii) Expenses of producing oil and gas to the extent deducted
in arriving at adjusted gross income.
(x) For tax years that begin after December 31, 2015, deduct
all of the following:
(i) To the extent not deducted in determining adjusted gross
income, contributions made by the taxpayer in the tax year less
qualified withdrawals made in the tax year from an ABLE savings
account, pursuant to the Michigan ABLE program act, 2015 PA 160,
MCL 206.981 to 206.997, not to exceed a total deduction of
$5,000.00 for a single return or $10,000.00 for a joint return per
tax year. The amount calculated under this subparagraph for an ABLE
savings account shall not be less than zero.
(ii) To the extent included in adjusted gross income, interest
earned in the tax year on the contributions to the taxpayer's ABLE
savings account if the contributions were deductible under
subparagraph (i).
(iii) To the extent included in adjusted gross income,
distributions that are qualified withdrawals from an ABLE savings
account to the designated beneficiary of that ABLE savings account.
(y) Add, to the extent not included in adjusted gross income,
the amount of money withdrawn by the taxpayer in the tax year from
an ABLE savings account, not to exceed the total amount deducted
under subdivision (x) in the tax year and all previous tax years,
if the withdrawal was not a qualified withdrawal as provided in the
Michigan ABLE program act, 2015 PA 160, MCL 206.981 to 206.997.
This subdivision does not apply to withdrawals that are less than
the sum of all contributions made to an ABLE savings account in all
previous tax years for which no deduction was claimed under
subdivision (x), less any contributions for which no deduction was
claimed under subdivision (x) that were withdrawn in all previous
tax years.
(z) For tax years that begin after December 31, 2018, deduct,
to the extent included in adjusted gross income, compensation
received in the tax year pursuant to the wrongful imprisonment
compensation act, 2016 PA 343, MCL 691.1751 to 691.1757.
(2) Except as otherwise provided in subsection (7) and section
30a, a personal exemption of $3,700.00 multiplied by the number of
personal and dependency exemptions shall be subtracted in the
calculation that determines taxable income. The number of personal
and dependency exemptions allowed shall be determined as follows:
(a) Each taxpayer may claim 1 personal exemption. However, if
a joint return is not made by the taxpayer and his or her spouse,
the taxpayer may claim a personal exemption for the spouse if the
spouse, for the calendar year in which the taxable year of the
taxpayer begins, does not have any gross income and is not the
dependent of another taxpayer.
(b) A taxpayer may claim a dependency exemption for each
individual who is a dependent of the taxpayer for the tax year.
(3) Except as otherwise provided in subsection (7), a single
additional exemption determined as follows shall be subtracted in
the calculation that determines taxable income in each of the
following circumstances:
(a) $1,800.00 for each taxpayer and every dependent of the
taxpayer who is a deaf person as defined in section 2 of the deaf
persons' interpreters act, 1982 PA 204, MCL 393.502; a paraplegic,
a quadriplegic, or a hemiplegic; a person who is blind as defined
in section 504; or a person who is totally and permanently disabled
as defined in section 522. When a dependent of a taxpayer files an
annual return under this part, the taxpayer or dependent of the
taxpayer, but not both, may claim the additional exemption allowed
under this subdivision.
(b) For tax years beginning after 2007, $250.00 for each
taxpayer and every dependent of the taxpayer who is a qualified
disabled veteran. When a dependent of a taxpayer files an annual
return under this part, the taxpayer or dependent of the taxpayer,
but not both, may claim the additional exemption allowed under this
subdivision. As used in this subdivision:
(i) "Qualified disabled veteran" means a veteran with a
service-connected disability.
(ii) "Service-connected disability" means a disability
incurred or aggravated in the line of duty in the active military,
naval, or air service as described in 38 USC 101(16).
(iii) "Veteran" means a person who served in the active
military, naval, marine, coast guard, or air service and who was
discharged or released from his or her service with an honorable or
general discharge.
(4) An individual with respect to whom a deduction under
subsection (2) is allowable to another taxpayer during the tax year
is not entitled to an exemption for purposes of subsection (2), but
may subtract $1,500.00 in the calculation that determines taxable
income for a tax year.
(5) A nonresident or a part-year resident is allowed that
proportion of an exemption or deduction allowed under subsection
(2), (3), or (4) that the taxpayer's portion of adjusted gross
income from Michigan sources bears to the taxpayer's total adjusted
gross income.
(6) In calculating taxable income, a taxpayer shall not
subtract from adjusted gross income the amount of prizes won by the
taxpayer under the McCauley-Traxler-Law-Bowman-McNeely lottery act,
1972 PA 239, MCL 432.1 to 432.47.
(7) For each tax year beginning on and after January 1, 2013,
the personal exemption allowed under subsection (2) shall be
adjusted by multiplying the exemption for the tax year beginning in
2012 by a fraction, the numerator of which is the United States
Consumer Price Index for the state fiscal year ending in the tax
year prior to the tax year for which the adjustment is being made
and the denominator of which is the United States Consumer Price
Index for the 2010-2011 state fiscal year. For the 2022 tax year
and each tax year after 2022, the adjusted amount determined under
this subsection shall be increased by an additional $600.00. The
resultant product shall be rounded to the nearest $100.00
increment.
As used in this section, "United States Consumer Price
Index"
means the United States Consumer Price Index for all urban
consumers
as defined and reported by the United States Department
of
Labor, Bureau of Labor Statistics. For
each tax year, the
exemptions allowed under subsection (3) shall be adjusted by
multiplying the exemption amount under subsection (3) for the tax
year by a fraction, the numerator of which is the United States
Consumer Price Index for the state fiscal year ending the tax year
prior to the tax year for which the adjustment is being made and
the denominator of which is the United States Consumer Price Index
for the 1998-1999 state fiscal year. The resultant product shall be
rounded to the nearest $100.00 increment.
(8) As used in this section, "retirement or pension benefits"
means distributions from all of the following:
(a) Except as provided in subdivision (d), qualified pension
trusts and annuity plans that qualify under section 401(a) of the
internal revenue code, including all of the following:
(i) Plans for self-employed persons, commonly known as Keogh
or HR10 plans.
(ii) Individual retirement accounts that qualify under section
408 of the internal revenue code if the distributions are not made
until the participant has reached 59-1/2 years of age, except in
the case of death, disability, or distributions described by
section 72(t)(2)(A)(iv) of the internal revenue code.
(iii) Employee annuities or tax-sheltered annuities purchased
under section 403(b) of the internal revenue code by organizations
exempt under section 501(c)(3) of the internal revenue code, or by
public school systems.
(iv) Distributions from a 401(k) plan attributable to employee
contributions mandated by the plan or attributable to employer
contributions.
(b) The following retirement and pension plans not qualified
under the internal revenue code:
(i) Plans of the United States, state governments other than
this state, and political subdivisions, agencies, or
instrumentalities of this state.
(ii) Plans maintained by a church or a convention or
association of churches.
(iii) All other unqualified pension plans that prescribe
eligibility for retirement and predetermine contributions and
benefits if the distributions are made from a pension trust.
(c) Retirement or pension benefits received by a surviving
spouse if those benefits qualified for a deduction prior to the
decedent's death. Benefits received by a surviving child are not
deductible.
(d) Retirement and pension benefits do not include:
(i) Amounts received from a plan that allows the employee to
set the amount of compensation to be deferred and does not
prescribe retirement age or years of service. These plans include,
but are not limited to, all of the following:
(A) Deferred compensation plans under section 457 of the
internal revenue code.
(B) Distributions from plans under section 401(k) of the
internal revenue code other than plans described in subdivision
(a)(iv).
(C) Distributions from plans under section 403(b) of the
internal revenue code other than plans described in subdivision
(a)(iii).
(ii) Premature distributions paid on separation, withdrawal,
or discontinuance of a plan prior to the earliest date the
recipient could have retired under the provisions of the plan.
(iii) Payments received as an incentive to retire early unless
the distributions are from a pension trust.
(9) In determining taxable income under this section, the
following limitations and restrictions apply:
(a) For a person born before 1946, this subsection provides no
additional restrictions or limitations under subsection (1)(f).
(b) Except as otherwise provided in subdivision (c), for a
person born in 1946 through 1952, the sum of the deductions under
subsection (1)(f)(i), (ii), and (iv) is limited to $20,000.00 for a
single return and $40,000.00 for a joint return. After that person
reaches the age of 67, the deductions under subsection (1)(f)(i),
(ii), and (iv) do not apply and that person is eligible for a
deduction of $20,000.00 for a single return and $40,000.00 for a
joint return, which deduction is available against all types of
income and is not restricted to income from retirement or pension
benefits. A person who takes the deduction under subsection (1)(e)
is not eligible for the unrestricted deduction of $20,000.00 for a
single return and $40,000.00 for a joint return under this
subdivision.
(c) Beginning January 1, 2013 for a person born in 1946
through 1952 and beginning January 1, 2018 for a person born after
1945 who has retired as of January 1, 2013, if that person receives
retirement or pension benefits from employment with a governmental
agency that was not covered by the federal social security act,
chapter 531, 49 Stat 620, the sum of the deductions under
subsection (1)(f)(i), (ii), and (iv) is limited to $35,000.00 for a
single return and, except as otherwise provided under this
subdivision, $55,000.00 for a joint return. If both spouses filing
a joint return receive retirement or pension benefits from
employment with a governmental agency that was not covered by the
federal social security act, chapter 531, 49 Stat 620, the sum of
the deductions under subsection (1)(f)(i), (ii), and (iv) is
limited to $70,000.00 for a joint return. After that person reaches
the age of 67, the deductions under subsection (1)(f)(i), (ii), and
(iv) do not apply and that person is eligible for a deduction of
$35,000.00 for a single return and $55,000.00 for a joint return,
or $70,000.00 for a joint return if applicable, which deduction is
available against all types of income and is not restricted to
income from retirement or pension benefits. A person who takes the
deduction under subsection (1)(e) is not eligible for the
unrestricted deduction of $35,000.00 for a single return and
$55,000.00 for a joint return, or $70,000.00 for a joint return if
applicable, under this subdivision.
(d) Except as otherwise provided under subdivision (c) for a
person who was retired as of January 1, 2013, for a person born
after 1952 who has reached the age of 62 through 66 years of age
and who receives retirement or pension benefits from employment
with a governmental agency that was not covered by the federal
social security act, chapter 532, 49 Stat 620, the sum of the
deductions under subsection (1)(f)(i), (ii), and (iv) is limited to
$15,000.00 for a single return and, except as otherwise provided
under this subdivision, $15,000.00 for a joint return. If both
spouses filing a joint return receive retirement or pension
benefits from employment with a governmental agency that was not
covered by the federal social security act, chapter 532, 49 Stat
620, the sum of the deductions under subsection (1)(f)(i), (ii),
and (iv) is limited to $30,000.00 for a joint return.
(e) Except as otherwise provided under subdivision (c) or (d),
for a person born after 1952, the deduction under subsection
(1)(f)(i), (ii), or (iv) does not apply. When that person reaches
the age of 67, that person is eligible for a deduction of
$20,000.00 for a single return and $40,000.00 for a joint return,
which deduction is available against all types of income and is not
restricted to income from retirement or pension benefits. If a
person takes the deduction of $20,000.00 for a single return and
$40,000.00 for a joint return, that person shall not take the
deduction under subsection (1)(f)(iii) and shall not take the
personal exemption under subsection (2). That person may elect not
to take the deduction of $20,000.00 for a single return and
$40,000.00 for a joint return and elect to take the deduction under
subsection (1)(f)(iii) and the personal exemption under subsection
(2) if that election would reduce that person's tax liability. A
person who takes the deduction under subsection (1)(e) is not
eligible for the unrestricted deduction of $20,000.00 for a single
return and $40,000.00 for a joint return under this subdivision.
(f) For a joint return, the limitations and restrictions in
this subsection shall be applied based on the age of the older
spouse filing the joint return.
(10)
As used in this section: , "oil
(a) "Oil and gas" means oil and gas subject to severance tax
under 1929 PA 48, MCL 205.301 to 205.317.
(b) "United States Consumer Price Index" means the United
States Consumer Price Index for all urban consumers as defined and
reported by the United States Department of Labor, Bureau of Labor
Statistics.
Sec. 51. (1) For receiving, earning, or otherwise acquiring
income from any source whatsoever, there is levied and imposed
under this part upon the taxable income of every person other than
a corporation a tax at the following rates in the following
circumstances:
(a) On and after October 1, 2007 and before October 1, 2012,
4.35%.
(b) Except as otherwise provided under subdivision (c), on and
after October 1, 2012, 4.25%.
(c) For each tax year beginning on and after January 1, 2023,
if the percentage increase in the total general fund/general
purpose revenue from the immediately preceding fiscal year is
greater than the inflation rate for the same period and the
inflation rate is positive, then the current rate shall be reduced
by an amount determined by multiplying that rate by a fraction, the
numerator of which is the difference between the total general
fund/general purpose revenue from the immediately preceding state
fiscal year and the capped general fund/general purpose revenue and
the denominator of which is the total revenue collected from this
part in the immediately preceding state fiscal year. For purposes
of this subdivision only, the state treasurer, the director of the
senate fiscal agency, and the director of the house fiscal agency
shall determine whether the total revenue distributed to general
fund/general purpose revenue has increased as required under this
subdivision based on the comprehensive annual financial report
prepared and published by the department of technology, management,
and budget in accordance with section 23 of article IX of the state
constitution of 1963. The state treasurer, the director of the
senate fiscal agency, and the director of the house fiscal agency
shall make the determination under this subdivision no later than
the date of the January 2023 revenue estimating conference
conducted pursuant to sections 367a through 367f of the management
and budget act, 1984 PA 431, MCL 18.1367a to 18.1367f, and the date
of each January revenue estimating conference conducted each year
thereafter. As used in this subdivision:
(i) "Capped general fund/general purpose revenue" means the
total general fund/general purpose revenue from the 2020-2021 state
fiscal year multiplied by the sum of 1 plus the product of 1.425
times the difference between a fraction, the numerator of which is
the consumer price index for the state fiscal year ending in the
tax year prior to the tax year for which the adjustment is being
made
and the denominator of which is the consumer price index
Consumer Price Index for the 2020-2021 state fiscal year, and 1.
(ii) "Total general fund/general purpose revenue" means the
total general fund/general purpose revenue and other financing
sources as published in the comprehensive annual financial report
schedule of revenue and other financing sources – general fund for
that fiscal year plus any distribution made pursuant to section
51d.
(2) Beginning January 1, 2000 and through November 30, 2018,
that percentage of the gross collections before refunds from the
tax levied under this section that is equal to 1.012% divided by
the income tax rate levied under this section shall be deposited in
the state school aid fund created in section 11 of article IX of
the state constitution of 1963. Beginning December 1, 2018, that
percentage of the gross collections before refunds from the tax
levied under this section that is equal to 0.954% divided by the
income tax rate levied under this section shall be deposited in the
state school aid fund created in section 11 of article IX of the
state constitution of 1963.
(3)
In addition to the distribution under subsection (2)
distributions
under subsections (2) and (4) and section
sections
51d, 51e, and 51f, beginning October 1, 2016, from the revenue
collected under this section an amount equal to 3.5% of the average
amount of farmland tax credits claimed under section 36109 of the
natural resources and environmental protection act, 1994 PA 451,
MCL 324.36109, for the immediately preceding 3 state fiscal years
shall be deposited into the agricultural preservation fund created
in section 36202 of the natural resources and environmental
protection act, 1994 PA 451, MCL 324.36202.
(4) In addition to the distributions under subsections (2) and
(3) and sections 51d, 51e, and 51f, beginning with the 2018-2019
state fiscal year and each fiscal year thereafter, from the revenue
collected under this section $69,000,000.00 shall be deposited into
the renew Michigan fund created in section 51g.
(5) (4)
The department shall annualize
rates provided in
subsection (1) as necessary. The applicable annualized rate shall
be imposed upon the taxable income of every person other than a
corporation for those tax years.
(6) (5)
The taxable income of a nonresident
shall be computed
in the same manner that the taxable income of a resident is
computed, subject to the allocation and apportionment provisions of
this part.
(7) (6)
A resident beneficiary of a trust
whose taxable income
includes all or part of an accumulation distribution by a trust, as
defined in section 665 of the internal revenue code, shall be
allowed a credit against the tax otherwise due under this part. The
credit shall be all or a proportionate part of any tax paid by the
trust under this part for any preceding taxable year that would not
have been payable if the trust had in fact made distribution to its
beneficiaries at the times and in the amounts specified in section
666 of the internal revenue code. The credit shall not reduce the
tax otherwise due from the beneficiary to an amount less than would
have been due if the accumulation distribution were excluded from
taxable income.
(8) (7)
The taxable income of a resident
who is required to
include income from a trust in his or her federal income tax return
under the provisions of 26 USC 671 to 679, shall include items of
income and deductions from the trust in taxable income to the
extent required by this part with respect to property owned
outright.
(9) (8)
It is the intention of this section
that the income
subject to tax of every person other than corporations shall be
computed in like manner and be the same as provided in the internal
revenue code subject to adjustments specifically provided for in
this part.
(10) (9)
As used in this section:
(a)
"Consumer price index" Price Index" means the
United
States
consumer price index Consumer
Price Index for all urban
consumers as defined and reported by the United States Department
of Labor, Bureau of Labor Statistics.
(b) "Inflation rate" means the annual percentage change in the
consumer
price index, Consumer Price
Index, as determined by the
department, comparing the 2 most recent completed state fiscal
years.
(c) "Person other than a corporation" means a resident or
nonresident individual or any of the following:
(i) A partner in a partnership as defined in the internal
revenue code.
(ii) A beneficiary of an estate or a trust as defined in the
internal revenue code.
(iii) An estate or trust as defined in the internal revenue
code.
(d) "Taxable income" means taxable income as defined in this
part subject to the applicable source and attribution rules
contained in this part.
Sec.
51d. In addition to the distribution under section 51(2),
distributions under sections 51, 51e, and 51f, the following
amounts of revenue collected from the tax levied under section 51
shall be deposited into the state treasury to the credit of the
Michigan transportation fund created in section 10 of 1951 PA 51,
MCL
247.660, and disbursed as provided in section 10(1)(k) 10(1)(l)
of 1951 PA 51, MCL 247.660:
(a) Beginning October 1, 2018 through September 30, 2019,
$150,000,000.00.$264,000,000.00.
(b) Beginning October 1, 2019 through September 30, 2020,
$325,000,000.00.$468,000,000.00.
(c) Beginning October 1, 2020 and each October 1 thereafter,
$600,000,000.00.
Sec. 51g. (1) The renew Michigan fund is created within the
state treasury. The state treasurer may receive money or other
assets from any source for deposit into the renew Michigan fund.
The state treasurer shall direct the investment of the fund. The
state treasurer shall credit to the fund interest and earnings from
fund investments.
(2) Money in the renew Michigan fund at the close of the
fiscal year shall remain in the fund and shall not lapse to the
general fund.
(3) The department of environmental quality shall be the
administrator of the renew Michigan fund for auditing purposes.
(4) Beginning with the 2018-2019 state fiscal year and each
fiscal year thereafter, the department shall expend money from the
renew Michigan fund, upon appropriation, only for the following
purposes:
(a) 65% of the revenue shall be used for environmental cleanup
and redevelopment, including, but not limited to, addressing
contaminated sites and emerging issues that have known or suspected
potential to cause adverse environmental or human health effects.
Criteria to determine which sites will be addressed each year may
include, but are not limited to, the following:
(i) Population risk, such as the number of people exposed,
whether sensitive populations are exposed, and whether the exposure
occurs in a residential setting.
(ii) Chemical risk, including the type and concentration of
chemicals and the public health risk associated with the chemicals.
(iii) Economic development potential, including the number of
jobs, the amount of investment, or the amount of increase in the
property's value.
(b) 13% of the revenue shall be used for waste management,
including, but not limited to, oversight of active landfills,
asbestos landfill gas monitoring, and department of environmental
quality expenditures for closure, postclosure monitoring or
maintenance, or corrective action for disposal areas that have been
licensed under this part.
(c) 22% of the revenue shall be used for recycling, including,
but not limited to, the following:
(i) Materials management planning, including grants to
counties, regional planning agencies, municipalities, and other
entities responsible for preparing, implementing, and maintaining
materials management plans.
(ii) Local recycling programs, including grants to local units
of government and nonprofit and for-profit entities for recycling
infrastructure, local recycling outreach campaigns, and other costs
necessary to support increased recycling.
(iii) Market development, including grants to local units of
government and nonprofit and for-profit entities for purchasing
equipment, research and development, or associated activities to
provide new or increased use of recycled materials to support the
development of recycling markets.
(5) By December 31 annually, the department shall prepare and
submit to the senate and house appropriations committees a report
detailing the amount of revenue received by and expenditures from
the renew Michigan fund during the prior fiscal year and the fund
balance at the end of the prior fiscal year.
Sec. 508. (1) "Gross rent" means the total rent contracted to
be paid by the renter or lessee of a homestead pursuant to dealing
at arms' length with the landlord of the homestead. When the
landlord and tenant have not dealt with each other at arms' length
and the department believes that the gross rent charged is
excessive, the department may adjust the gross rent to a reasonable
amount for the purposes of this chapter.
(2) "Homestead" means a dwelling or unit in a multiple-unit
dwelling that is subject to ad valorem taxes, or a service charge
in lieu of taxes as provided by section 15a of the state housing
development authority act of 1966, 1966 PA 346, MCL 125.1415a,
owned and occupied as a home by the owner of the dwelling or unit,
or occupied as the dwelling of the renter or lessee, including all
unoccupied real property not classified for ad valorem tax purposes
as commercial, industrial, residential, or timber-cut over, owned
by the owner of the homestead. Beginning in the 1990 tax year, a
homestead does not include unoccupied real property that is leased
or rented by the owner to another person and that is not adjacent
and contiguous to the home of the owner. Additionally, the
following apply:
(a) If a homestead is an integral part of a larger unit of
assessment such as commercial, industrial, residential, timber-cut
over, or a multipurpose or multidwelling building, the tax on the
homestead shall be the same proportion of the total property tax as
the proportion of the value of the homestead is to the total value
of the assessed property.
(b) If the gross receipts of the agricultural or horticultural
operations do not exceed the household income, or if there are no
gross receipts, the following apply:
(i) If the claimant has lived on the land 10 years or more,
all of the adjacent and contiguous agricultural or horticultural
lands shall be considered a homestead and the credit is allowed for
all the land.
(ii) If the claimant has lived on the land less than 10 years,
not more than 5 acres of adjacent and contiguous agricultural or
horticultural land shall be considered a part of the homestead and
the credit is allowed for that part of the land.
(c) A mobile home or trailer coach in a trailer coach park is
a homestead and the site rent for space is considered the rent of a
homestead. The specific tax levied by section 41 of 1959 PA 243,
MCL 125.1041, is considered a property tax.
(3) "Household" means a claimant and spouse.
(4) "Total household resources" means all income received by
all persons of a household in a tax year while members of a
household, excluding for tax years beginning after December 31,
2018 any compensation received pursuant to the wrongful
imprisonment compensation act, 2016 PA 343, MCL 691.1751 to
691.1757, and increased by the following deductions from federal
gross income:
(a) Any net business loss after netting all business income
and loss.
(b) Any net rental or royalty loss.
(c) Any carryback or carryforward of a net operating loss as
defined in section 172(b)(2) of the internal revenue code.
Enacting section 1. Section 51 of the income tax act of 1967,
1967 PA 281, MCL 206.51, as amended by this amendatory act, is
retroactive and effective beginning December 1, 2018.
