STATE EITC: RESIDENCY REQUIREMENT H.B. 4514 (H-1):
FLOOR SUMMARY
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House Bill 4514 (Substitute H-1 as reported without amendment)
Sponsor: Representative Michael Lahti
House Committee: Tax Policy
Senate Committee: Finance
CONTENT
The bill would amend the Income Tax Act to establish a six-month State residency requirement for a taxpayer to claim the State earned income tax credit (EITC) for tax years beginning after December 31, 2008.
Public Act 372 of 2006 amended the Act to allow a taxpayer to claim an income tax credit equal to a percentage of the credit he or she may claim for a tax year under Section 32 of the Internal Revenue Code (which permits eligible individuals to claim a refundable Federal income tax credit). The percentage that a taxpayer may claim is 10% for tax years beginning during 2008, and 20% for tax years beginning after December 31, 2008.
Under the bill, for a tax year beginning after December 31, 2008, a taxpayer could claim this credit as long as he or she was a resident of the State for at least six months of the same tax year.
MCL 206.272 Legislative Analyst: Suzanne Lowe
FISCAL IMPACT
Under current law, the earned income tax credit is expected to reduce income tax revenue $320.0 million in FY 2009-10. The bill would reduce the cost of the credit (increase net income tax revenue) in the range of $2.0 million to $4.0 million beginning in FY 2009-10. This reduction in the cost of the refundable earned income tax credit would benefit the General Fund. The bill would have no impact on local governments.
Date Completed: 6-4-09 Fiscal Analyst: Jay Wortley
Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. hb4514/0910