April 10, 2008, Introduced by Reps. Opsommer, Knollenberg, Meadows, Rocca, Rick Jones, Stahl, Emmons and Amos 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 2008 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), or other qualified retirement plan in
8 the tax year. Income does not include any of the following:
9 (a) The first $300.00 of gifts in cash or kind from
10 nongovernmental sources.
11 (b) The first $300.00 received from awards, prizes, lottery,
12 bingo, or other gambling winnings.
13 (c) Surplus foods.
14 (d) Relief in kind supplied by a governmental agency.
15 (e) Payments or credits under this act.
16 (f) A governmental grant that has to be used by the claimant
17 for rehabilitation of the claimant's homestead.
18 (g) Stipends received by a person 60 years of age or older
19 who is acting as a foster grandparent under the foster
20 grandparent program authorized pursuant to section 211 of part B
21 of title II of the domestic volunteer service act of 1973, Public
22 Law 93-113, 42
5011, or who is acting as a senior
23 companion pursuant to section 213 of part C of title II of the
24 domestic volunteer service act of 1973, Public Law 93-113, 42
U.S.C. USC 5013.
26 (h) Amounts deducted from monthly social security or
27 railroad retirement benefits for medicare premiums.
1 (i) Contributions by an employer to life, accident, or
2 health insurance plans.
3 (j) Energy assistance grants and energy assistance tax
5 (k) The first 50% of veteran's disability payments.
6 (2) "Owner" means a natural person who owns or is purchasing
7 a homestead under a mortgage or land contract, who owns or is
8 purchasing a dwelling situated on the leased lands of another, or
9 who is a tenant-stockholder of a cooperative housing corporation.
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 act 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
20 (2) A person who rents or leases a homestead may claim a
21 similar credit computed under this section and section 522 based
22 upon 17% of the gross rent paid for tax years before the 1994 tax
23 year, or 20% of the gross rent paid for tax years after the 1993
24 tax year. A person who rents or leases a homestead subject to a
25 service charge in lieu of ad valorem taxes as provided by section
26 15a of the state housing development authority act of 1966,
No. 346 of the Public Acts of 1966, being section 125.1415a of
the Michigan Compiled Laws 1966
PA 346, MCL 125.1415a, may claim
2 a similar credit computed under this section and section 522
3 based upon 10% of the gross rent paid.
4 (3) If the credit claimed under this section and section 522
5 exceeds the tax liability for the tax year or if there is no tax
6 liability for the tax year, the amount of the claim not used as
7 an offset against the tax liability shall, after examination and
8 review, be approved for payment, without interest, to the
9 claimant. In determining the amount of the payment under this
10 subsection, withholdings and other credits shall be used first to
11 offset any tax liabilities.
12 (4) If the homestead is an integral part of a multipurpose
13 or multidwelling building that is federally aided housing or
14 state aided housing, a claimant who is a senior citizen entitled
15 to a payment under subsection (2) may assign the right to that
16 payment to a mortgagor if the mortgagor reduces the rent charged
17 and collected on the claimant's homestead in an amount equal to
18 the tax credit payment provided in this chapter. The assignment
19 of the claim is valid only if the Michigan state housing
20 development authority, by affidavit, verifies that the claimant's
21 rent has been so reduced.
22 (5) Only the renter or lessee shall claim a credit on
23 property that is rented or leased as a homestead.
24 (6) A person who discriminates in the charging or collection
25 of rent on a homestead by increasing the rent charged or
26 collected because the renter or lessee claims and receives a
27 credit or payment under this chapter is guilty of a misdemeanor.
1 Discrimination against a renter who claims and receives the
2 credit under this section and section 522 by a reduction of the
3 rent on the homestead of a person who does not claim and receive
4 the credit is a misdemeanor. If discriminatory rents are charged
5 or collected, each charge or collection of the higher or lower
6 payment is a separate offense. Each acceptance of a payment of
7 rent is a separate offense.
8 (7) A person who received
aid to families with dependent
children, state family assistance, or state disability assistance
10 through department of human services programs pursuant to the
11 social welfare act,
Act No. 280 of the Public Acts of 1939, as
amended, being sections 400.1 to 400.119b of the Michigan
Compiled Laws 1939 PA
280, MCL 400.1 to 400.119b, in the tax
14 for which the person is filing a return shall have a credit that
15 is authorized and computed under this section and section 522
16 reduced by an amount equal to the product of the claimant's
17 credit multiplied by the quotient of the sum of the claimant's
aid to families with dependent children, state family assistance,
and state disability assistance
through department of human
20 services programs pursuant to the social welfare act, 1939 PA
21 280, MCL 400.1 to 400.119b, for the tax year divided by the
22 claimant's household income. The reduction of credit shall not
23 exceed the sum of the
aid to families with dependent children,
state family assistance, and state disability assistance through
25 department of human services programs pursuant to the social
26 welfare act, 1939 PA 280, MCL 400.1 to 400.119b, for the tax
27 year. For the purposes of this subsection,
aid to families with
dependent children any
assistance through department of human
2 services programs does not include child support payments that
3 offset or reduce payments made to the claimant.
tax years that begin before January
1, 2008, a
5 credit under subsection (1) or (2) shall be reduced by 10% for
6 each claimant whose household income exceeds $73,650.00 and by an
7 additional 10% for each increment of $1,000.00 of household
8 income in excess of $73,650.00. For tax years that begin on or
9 after January 1, 2008, a credit under subsection (1) or (2) shall
10 be reduced by 10% for each claimant whose household income
11 exceeds $84,000.00 and by an additional 10% for each increment of
12 $1,250.00 of household income in excess of $84,000.00.
13 (9) If the credit authorized and calculated under this
14 section and section 522 and adjusted under subsection (7) or (8)
15 does not provide to a senior citizen who rents or leases a
16 homestead that amount attributable to rent that constitutes more
17 than 40% of the household income of the senior citizen, the
18 senior citizen may claim a credit based upon the amount of
19 household income attributable to rent as provided by this
21 (10) A senior citizen whose gross rent paid for the tax year
22 is more than the percentage of household income specified in
23 subsection (9) for the respective tax year may claim a credit for
24 the amount of rent paid that constitutes more than the percentage
25 of the household income of the senior citizen specified in
26 subsection (9) and that was not provided to the senior citizen by
27 the credit computed pursuant to this section and section 522 and
1 adjusted pursuant to subsection (7) or (8).
2 (11) The department may promulgate rules to implement
3 subsections (9) to
and may prescribe a table to allow a
4 claimant to determine the credit provided under this section and
5 section 522 in the instruction booklet that accompanies the
6 respective income tax or property tax credit forms used by
8 (12) A senior citizen may claim the credit under subsections
9 (9) to
(16) (14) on the same form as the property tax credit
10 permitted by subsection (2). The department shall adjust the
11 forms accordingly.
12 (13) A senior citizen who moves to a different rented or
13 leased homestead shall determine, for 2 tax years after the move,
14 both his or her qualification to claim a credit under subsections
15 (9) to
(16) (14) and the amount of a credit under subsections (9)
(16) (14) on the basis of the annualized final monthly rental
17 payment at his or her previous homestead, if this annualized
18 rental is less than the senior citizen's actual annual rental
20 (14) For a return of less than 12 months, the claim for a
21 credit under subsections (9) to
(16) (13) shall
23 (15) The Michigan state housing development authority shall
24 report on the effect of the credit provided by subsections (9) to
(16) (14) on the price of rented and leased homesteads. If the
26 authority determines that the price of rented and leased
27 homesteads has increased as a result of the credit provided by
1 subsections (9) to
(16) (14), the authority shall make
2 recommendations to the legislature to remedy this situation. The
3 report shall be made to the chairpersons of the house and senate
4 committees that have primary responsibility for taxation
5 legislation 2 years after the credit provided by subsections (9)
(16) (14) is in effect.
7 (16) The total credit allowed by this section and section
8 522 shall not exceed $1,200.00
per year for tax years that begin
9 before January 1, 2008 and $1,400.00 for tax years that begin
10 after December 31, 2007.
11 Sec. 522. (1) The amount of a claim made pursuant to this
12 chapter shall be determined as follows:
13 (a) A claimant is entitled to a credit against the state
14 income tax liability equal to 60% of the amount by which the
15 property taxes on the homestead, or the credit for rental of the
16 homestead for the tax year, exceeds 3.5% of the claimant's
17 household income for that tax year.
18 (b) A claimant who is a senior citizen or a paraplegic,
19 hemiplegic, or quadriplegic and for tax years that begin after
20 December 31, 1999, a claimant who is totally and permanently
21 disabled or deaf is entitled to a credit against the state income
22 tax liability for the amount by which the property taxes on the
23 homestead, the credit for rental of the homestead, or a service
24 charge in lieu of ad valorem taxes as provided by section 15a of
25 the state housing development authority act of 1966, 1966 PA 346,
26 MCL 125.1415a, for the tax year exceeds the percentage of the
27 claimant's household income for that tax year computed as
2 Household income Percentage
$3,000.00 $4,000.00 .0%
$3,000.00 $4,000.00 but
$4,000.00 $5,000.00 1.0%
$4,000.00 $5,000.00 but
$5,000.00 $6,500.00 2.0%
$5,000.00 $6,500.00 but
$6,000.00 $7,500.00 3.0%
$6,000.00 $7,500.00 3.5%
11 (c) For a tax year that begins before January 1, 2000, a
12 claimant who is totally and permanently disabled is entitled to a
13 credit against the state income tax liability equal to 60% of the
14 amount by which the property taxes on the homestead, or the
15 credit for rental of the homestead or for a service charge in
16 lieu of ad valorem taxes as provided in section 15a of the state
17 housing development authority act of 1966, 1966 PA 346, MCL
18 125.1415a, for the tax year, exceeds the percentage of the
19 claimant's household income for that tax year based on the
20 schedule in subdivision (b).
21 (d) A claimant who is an eligible serviceperson, eligible
22 veteran, or eligible widow or widower is entitled to a credit
23 against the state income tax liability for a percentage of the
24 property taxes on the homestead for the tax year not in excess of
25 100% determined as follows:
26 (i) Divide the taxable value allowance specified in section
1 506 by the taxable value of the homestead or, if the eligible
2 serviceperson, eligible veteran, or eligible widow or widower
3 leases or rents a homestead, divide 17% of the total annual rent
4 paid for tax years before the 1994 tax year, or 20% of the total
5 annual rent paid for tax years after the 1993 tax year on the
6 property by the property tax rate on the property.
7 (ii) Multiply the property taxes on the homestead by the
8 percentage computed in subparagraph (i).
9 (e) A claimant who is blind is entitled to a credit against
10 the state income tax liability for a percentage of the property
11 taxes on the homestead for the tax year determined as follows:
12 (i) If the taxable value of the homestead is $3,500.00 or
13 less, 100% of the property taxes.
14 (ii) If the taxable value of the homestead is more than
15 $3,500.00, the percentage that $3,500.00 bears to the taxable
16 value of the homestead.
17 (2) A person who is qualified to make a claim under more
18 than 1 classification shall elect the classification under which
19 the claim is made.
20 (3) Only 1 claimant per household for a tax year is entitled
21 to the credit, unless both the husband and wife filing a joint
22 return are blind, then each shall be considered a claimant.
23 (4) As used in this section, "totally and permanently
24 disabled" means disability as defined in section 216 of title II
25 of the social security act, 42
U.S.C. USC 416.
26 (5) A senior citizen who has a total household income for
27 the tax year of $6,000.00 or less and who for 1973 received a
1 senior citizen homestead exemption under former section 7c of the
2 general property tax act,
Act No. 206 of the Public Acts of 1893
3 1893 PA 206, may compute the credit against the state income tax
4 liability for a percentage of the property taxes on the homestead
5 for the tax year determined as follows:
6 (a) If the taxable value of the homestead is $2,500.00 or
7 less, 100% of the property taxes.
8 (b) If the taxable value of the homestead is more than
9 $2,500.00, the percentage that $2,500.00 bears to the taxable
10 value of the homestead.
11 (6) For a return of less than 12 months, the claim shall be
12 reduced proportionately.
13 (7) The commissioner may prescribe tables that may be used
14 to determine the amount of the claim.
15 (8) The total credit allowed in this section for each year
after December 31, 1975 $1,200.00 per year the
17 amount determined under section 520.
18 (9) The total credit allowable under this act and part 361
19 of the natural resources and environmental protection act, 1994
20 PA 451, MCL 324.36101 to 324.36117, shall not exceed the total
21 property tax due and payable by the claimant in that year. The
22 amount by which the credit exceeds the property tax due and
23 payable shall be deducted from the credit claimed under part 361
24 of the natural resources and environmental protection act, 1994
25 PA 451, MCL 324.36101 to 324.36117.