May 15, 2012, Introduced by Senator JOHNSON and referred to the Committee on Finance.
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 2011 PA 38, section 520 as
amended by 2011 PA 273, and section 522 as amended by 2011 PA
180, and by adding section 274.
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 (f) Deduct the following to the extent included in adjusted
25 gross income: subject to the limitations and restrictions set
26 forth in subsection (9):
27 (i) Retirement or pension benefits received from a federal
1 public retirement system or from a public retirement system of or
2 created by this state or a political subdivision of this state.
3 (ii) Retirement or pension benefits received from a public
4 retirement system of or created by another state or any of its
5 political subdivisions if the income tax laws of the other state
6 permit a similar deduction or exemption or a reciprocal deduction
7 or exemption of a retirement or pension benefit received from a
8 public retirement system of or created by this state or any of
9 the political subdivisions of this state.
10 (iii) Social security benefits as defined in section 86 of the
11 internal revenue code.
12 (iv) Beginning on and after January 1, 2007, retirement or
13 pension benefits not deductible under subparagraph (i) or
14 subdivision (e) from any other retirement or pension system or
15 benefits from a retirement annuity policy in which payments are
16 made for life to a senior citizen, to a maximum of $42,240.00 for
17 a single return and $84,480.00 for a joint return. The maximum
18 amounts allowed under this subparagraph shall be reduced by the
19 amount of the deduction for retirement or pension benefits
20 claimed under subparagraph (i) or subdivision (e) and by the
21 amount of a deduction claimed under subdivision (p). For the 2008
22 tax year and each tax year after 2008, the maximum amounts
23 allowed under this subparagraph shall be adjusted by the
24 percentage increase in the United States consumer price index for
25 the immediately preceding calendar year. The department shall
26 annualize the amounts provided in this subparagraph as necessary.
27 As used in this subparagraph, "senior citizen" means that term as
1 defined in section 514.
2 (v) The amount determined to be the section 22 amount
3 eligible for the elderly and the permanently and totally disabled
4 credit provided in section 22 of the internal revenue code.
5 (g) Adjustments resulting from the application of section
6 271.
7 (h) Adjustments with respect to estate and trust income as
8 provided in section 36.
9 (i) Adjustments resulting from the allocation and
10 apportionment provisions of chapter 3.
11 (j) Deduct the following payments made by the taxpayer in
12 the tax year:
13 (i) For the 2010 tax year and each tax year after 2010, the
14 amount of a charitable contribution made to the advance tuition
15 payment fund created under section 9 of the Michigan education
16 trust act, 1986 PA 316, MCL 390.1429.
17 (ii) The amount of payment made under an advance tuition
18 payment contract as provided in the Michigan education trust act,
19 1986 PA 316, MCL 390.1421 to 390.1442.
20 (iii) The amount of payment made under a contract with a
21 private sector investment manager that meets all of the following
22 criteria:
23 (A) The contract is certified and approved by the board of
24 directors of the Michigan education trust to provide equivalent
25 benefits and rights to purchasers and beneficiaries as an advance
26 tuition payment contract as described in subparagraph (ii).
27 (B) The contract applies only for a state institution of
1 higher education as defined in the Michigan education trust act,
2 1986 PA 316, MCL 390.1421 to 390.1442, or a community or junior
3 college in Michigan.
4 (C) The contract provides for enrollment by the contract's
5 qualified beneficiary in not less than 4 years after the date on
6 which the contract is entered into.
7 (D) The contract is entered into after either of the
8 following:
9 (I) The purchaser has had his or her offer to enter into an
10 advance tuition payment contract rejected by the board of
11 directors of the Michigan education trust, if the board
12 determines that the trust cannot accept an unlimited number of
13 enrollees upon an actuarially sound basis.
14 (II) The board of directors of the Michigan education trust
15 determines that the trust can accept an unlimited number of
16 enrollees upon an actuarially sound basis.
17 (k) If an advance tuition payment contract under the
18 Michigan education trust act, 1986 PA 316, MCL 390.1421 to
19 390.1442, or another contract for which the payment was
20 deductible under subdivision (j) is terminated and the qualified
21 beneficiary under that contract does not attend a university,
22 college, junior or community college, or other institution of
23 higher education, add the amount of a refund received by the
24 taxpayer as a result of that termination or the amount of the
25 deduction taken under subdivision (j) for payment made under that
26 contract, whichever is less.
27 (l) Deduct from the taxable income of a purchaser the amount
1 included as income to the purchaser under the internal revenue
2 code after the advance tuition payment contract entered into
3 under the Michigan education trust act, 1986 PA 316, MCL 390.1421
4 to 390.1442, is terminated because the qualified beneficiary
5 attends an institution of postsecondary education other than
6 either a state institution of higher education or an institution
7 of postsecondary education located outside this state with which
8 a state institution of higher education has reciprocity.
9 (m) Add, to the extent deducted in determining adjusted
10 gross income, the net operating loss deduction under section 172
11 of the internal revenue code.
12 (n) Deduct a net operating loss deduction for the taxable
13 year as determined under section 172 of the internal revenue code
14 subject to the modifications under section 172(b)(2) of the
15 internal revenue code and subject to the allocation and
16 apportionment provisions of chapter 3 of this part for the
17 taxable year in which the loss was incurred.
18 (o) Deduct, to the extent included in adjusted gross income,
19 benefits from a discriminatory self-insurance medical expense
20 reimbursement plan.
21 (p) Beginning on and after January 1, 2007, subject to any
22 limitation provided in this subdivision, a taxpayer who is a
23 senior citizen may deduct to the extent included in adjusted
24 gross income, interest, dividends, and capital gains received in
25 the tax year not to exceed $9,420.00 for a single return and
26 $18,840.00 for a joint return. The maximum amounts allowed under
27 this subdivision shall be reduced by the amount of a deduction
1 claimed for retirement benefits under subdivision (e) or a
2 deduction claimed under subdivision (f)(i), (ii), (iv), or (v). For
3 the 2008 tax year and each tax year after 2008, the maximum
4 amounts allowed under this subdivision shall be adjusted by the
5 percentage increase in the United States consumer price index for
6 the immediately preceding calendar year. The department shall
7 annualize the amounts provided in this subdivision as necessary.
8 Beginning January 1, 2012, the deduction under this subsection is
9 not available to a senior citizen born after 1945. As used in
10 this subdivision, "senior citizen" means that term as defined in
11 section 514.
12 (q) Deduct, to the extent included in adjusted gross income,
13 all of the following:
14 (i) The amount of a refund received in the tax year based on
15 taxes paid under this part.
16 (ii) The amount of a refund received in the tax year based on
17 taxes paid under the city income tax act, 1964 PA 284, MCL
18 141.501 to 141.787.
19 (iii) The amount of a credit received in the tax year based on
20 a claim filed under sections 520 and 522 to the extent that the
21 taxes used to calculate the credit were not used to reduce
22 adjusted gross income for a prior year.
23 (r) Add the amount paid by the state on behalf of the
24 taxpayer in the tax year to repay the outstanding principal on a
25 loan taken on which the taxpayer defaulted that was to fund an
26 advance tuition payment contract entered into under the Michigan
27 education trust act, 1986 PA 316, MCL 390.1421 to 390.1442, if
1 the cost of the advance tuition payment contract was deducted
2 under subdivision (j) and was financed with a Michigan education
3 trust secured loan.
4 (s) Deduct, to the extent included in adjusted gross income,
5 any amount, and any interest earned on that amount, received in
6 the tax year by a taxpayer who is a Holocaust victim as a result
7 of a settlement of claims against any entity or individual for
8 any recovered asset pursuant to the German act regulating
9 unresolved property claims, also known as Gesetz zur Regelung
10 offener Vermogensfragen, as a result of the settlement of the
11 action entitled In re: Holocaust victim assets litigation, CV-96-
12 4849, CV-96-5161, and CV-97-0461 (E.D. NY), or as a result of any
13 similar action if the income and interest are not commingled in
14 any way with and are kept separate from all other funds and
15 assets of the taxpayer. As used in this subdivision:
16 (i) "Holocaust victim" means a person, or the heir or
17 beneficiary of that person, who was persecuted by Nazi Germany or
18 any Axis regime during any period from 1933 to 1945.
19 (ii) "Recovered asset" means any asset of any type and any
20 interest earned on that asset including, but not limited to, bank
21 deposits, insurance proceeds, or artwork owned by a Holocaust
22 victim during the period from 1920 to 1945, withheld from that
23 Holocaust victim from and after 1945, and not recovered,
24 returned, or otherwise compensated to the Holocaust victim until
25 after 1993.
26 (t) Deduct, to the extent not deducted in determining
27 adjusted gross income, both of the following:
1 (i) Contributions made by the taxpayer in the tax year less
2 qualified withdrawals made in the tax year from education savings
3 accounts, calculated on a per education savings account basis,
4 pursuant to the Michigan education savings program act, 2000 PA
5 161, MCL 390.1471 to 390.1486, not to exceed a total deduction of
6 $5,000.00 for a single return or $10,000.00 for a joint return
7 per tax year. The amount calculated under this subparagraph for
8 each education savings account shall not be less than zero.
9 (ii) The amount under section 30f.
10 (u) Add, to the extent not included in adjusted gross
11 income, the amount of money withdrawn by the taxpayer in the tax
12 year from education savings accounts, not to exceed the total
13 amount deducted under subdivision (t) in the tax year and all
14 previous tax years, if the withdrawal was not a qualified
15 withdrawal as provided in the Michigan education savings program
16 act, 2000 PA 161, MCL 390.1471 to 390.1486. This subdivision does
17 not apply to withdrawals that are less than the sum of all
18 contributions made to an education savings account in all
19 previous tax years for which no deduction was claimed under
20 subdivision (t), less any contributions for which no deduction
21 was claimed under subdivision (t) that were withdrawn in all
22 previous tax years.
23 (v) A taxpayer who is a resident tribal member may deduct,
24 to the extent included in adjusted gross income, all nonbusiness
25 income earned or received in the tax year and during the period
26 in which an agreement entered into between the taxpayer's tribe
27 and this state pursuant to section 30c of 1941 PA 122, MCL
1 205.30c, is in full force and effect. As used in this
2 subdivision:
3 (i) "Business income" means business income as defined in
4 section 4 and apportioned under chapter 3.
5 (ii) "Nonbusiness income" means nonbusiness income as defined
6 in section 14 and, to the extent not included in business income,
7 all of the following:
8 (A) All income derived from wages whether the wages are
9 earned within the agreement area or outside of the agreement
10 area.
11 (B) All interest and passive dividends.
12 (C) All rents and royalties derived from real property
13 located within the agreement area.
14 (D) All rents and royalties derived from tangible personal
15 property, to the extent the personal property is utilized within
16 the agreement area.
17 (E) Capital gains from the sale or exchange of real property
18 located within the agreement area.
19 (F) Capital gains from the sale or exchange of tangible
20 personal property located within the agreement area at the time
21 of sale.
22 (G) Capital gains from the sale or exchange of intangible
23 personal property.
24 (H) All pension income and benefits including, but not
25 limited to, distributions from a 401(k) plan, individual
26 retirement accounts under section 408 of the internal revenue
27 code, or a defined contribution plan, or payments from a defined
1 benefit plan.
2 (I) All per capita payments by the tribe to resident tribal
3 members, without regard to the source of payment.
4 (J) All gaming winnings.
5 (iii) "Resident tribal member" means an individual who meets
6 all of the following criteria:
7 (A) Is an enrolled member of a federally recognized tribe.
8 (B) The individual's tribe has an agreement with this state
9 pursuant to section 30c of 1941 PA 122, MCL 205.30c, that is in
10 full force and effect.
11 (C) The individual's principal place of residence is located
12 within the agreement area as designated in the agreement under
13 sub-subparagraph (B).
14 (w) For tax years beginning after December 31, 2011,
15 eliminate all of the following:
16 (i) Income from producing oil and gas to the extent included
17 in adjusted gross income.
18 (ii) Expenses of producing oil and gas to the extent deducted
19 in arriving at adjusted gross income.
20 (x) Deduct an amount equal to $600.00 multiplied by the
21 number of exemptions claimed by the taxpayer under subsection (2)
22 in the tax year for dependents of the taxpayer who are children
23 younger than 19 years of age on the last day of the tax year.
24 (2) Except as otherwise provided in subsection (7), a
25 personal exemption of $3,700.00 multiplied by the number of
26 personal or dependency exemptions allowable on the taxpayer's
27 federal income tax return pursuant to the internal revenue code
1 shall be subtracted in the calculation that determines taxable
2 income.
3 (3) Except as otherwise provided in subsection (7), a single
4 additional exemption determined as follows shall be subtracted in
5 the calculation that determines taxable income in each of the
6 following circumstances:
7 (a) $1,800.00 for each taxpayer and every dependent of the
8 taxpayer who is a deaf person as defined in section 2 of the deaf
9 persons' interpreters act, 1982 PA 204, MCL 393.502; a
10 paraplegic, a quadriplegic, or a hemiplegic; a person who is
11 blind as defined in section 504; or a person who is totally and
12 permanently disabled as defined in section 522. When a dependent
13 of a taxpayer files an annual return under this part, the
14 taxpayer or dependent of the taxpayer, but not both, may claim
15 the additional exemption allowed under this subdivision. As used
16 in this subdivision, "dependent" means that term as defined in
17 section 30e.
18 (b) For tax years beginning after 2007, $250.00 for each
19 taxpayer and every dependent of the taxpayer who is a qualified
20 disabled veteran. When a dependent of a taxpayer files an annual
21 return under this part, the taxpayer or dependent of the
22 taxpayer, but not both, may claim the additional exemption
23 allowed under this subdivision. As used in this subdivision:
24 (i) "Qualified disabled veteran" means a veteran with a
25 service-connected disability.
26 (ii) "Service-connected disability" means a disability
27 incurred or aggravated in the line of duty in the active
1 military, naval, or air service as described in 38 USC 101(16).
2 (iii) "Veteran" means a person who served in the active
3 military, naval, marine, coast guard, or air service and who was
4 discharged or released from his or her service with an honorable
5 or general discharge.
6 (4) An individual with respect to whom a deduction under
7 section 151 of the internal revenue code is allowable to another
8 federal taxpayer during the tax year is not considered to have an
9 allowable federal exemption for purposes of subsection (2), but
10 may subtract $1,500.00 in the calculation that determines taxable
11 income for a tax year.
12 (5) A nonresident or a part-year resident is allowed that
13 proportion of an exemption or deduction allowed under subsection
14 (2), (3), or (4) that the taxpayer's portion of adjusted gross
15 income from Michigan sources bears to the taxpayer's total
16 adjusted gross income.
17 (6) In calculating taxable income, a taxpayer shall not
18 subtract from adjusted gross income the amount of prizes won by
19 the taxpayer under the McCauley-Traxler-Law-Bowman-McNeely
20 lottery act, 1972 PA 239, MCL 432.1 to 432.47.
21 (7) For each tax year beginning on and after January 1,
22 2013, the personal exemption allowed under subsection (2) shall
23 be adjusted by multiplying the exemption for the tax year
24 beginning in 2012 by a fraction, the numerator of which is the
25 United States consumer price index for the state fiscal year
26 ending in the tax year prior to the tax year for which the
27 adjustment is being made and the denominator of which is the
1 United States consumer price index for the 2010-2011 state fiscal
2 year. The resultant product shall be rounded to the nearest
3 $100.00 increment. As used in this section, "United States
4 consumer price index" means the United States consumer price
5 index for all urban consumers as defined and reported by the
6 United States department of labor, bureau of labor statistics.
7 For each tax year, the exemptions allowed under subsection (3)
8 shall be adjusted by multiplying the exemption amount under
9 subsection (3) for the tax year by a fraction, the numerator of
10 which is the United States consumer price index for the state
11 fiscal year ending the tax year prior to the tax year for which
12 the adjustment is being made and the denominator of which is the
13 United States consumer price index for the 1998-1999 state fiscal
14 year. The resultant product shall be rounded to the nearest
15 $100.00 increment. For a taxpayer whose total household resources
16 are $75,000.00 or more for a single return or $150,000.00 or more
17 for a joint return, the personal exemption allowed under
18 subsection (2) shall be adjusted by multiplying the exemption for
19 the tax year for a single return by a fraction, the numerator of
20 which is $100,000.00 minus the taxpayer's total household
21 resources, and the denominator of which is $25,000.00, and for a
22 joint return by a fraction, the numerator of which is $200,000.00
23 minus the taxpayer's total household resources, and the
24 denominator of which is $50,000.00. The personal exemption
25 allowed under subsection (2) shall not be allowed for a single
26 taxpayer whose total household resources exceed $100,000.00 or
27 for joint filers whose total household resources exceed
1 $200,000.00.
2 (8) As used in subsection (1)(f), "retirement or pension
3 benefits" means distributions from all of the following:
4 (a) Except as provided in subdivision (d), qualified pension
5 trusts and annuity plans that qualify under section 401(a) of the
6 internal revenue code, including all of the following:
7 (i) Plans for self-employed persons, commonly known as Keogh
8 or HR10 plans.
9 (ii) Individual retirement accounts that qualify under
10 section 408 of the internal revenue code if the distributions are
11 not made until the participant has reached 59-1/2 years of age,
12 except in the case of death, disability, or distributions
13 described by section 72(t)(2)(A)(iv) of the internal revenue code.
14 (iii) Employee annuities or tax-sheltered annuities purchased
15 under section 403(b) of the internal revenue code by
16 organizations exempt under section 501(c)(3) of the internal
17 revenue code, or by public school systems.
18 (iv) Distributions from a 401(k) plan attributable to
19 employee contributions mandated by the plan or attributable to
20 employer contributions.
21 (b) The following retirement and pension plans not qualified
22 under the internal revenue code:
23 (i) Plans of the United States, state governments other than
24 this state, and political subdivisions, agencies, or
25 instrumentalities of this state.
26 (ii) Plans maintained by a church or a convention or
27 association of churches.
1 (iii) All other unqualified pension plans that prescribe
2 eligibility for retirement and predetermine contributions and
3 benefits if the distributions are made from a pension trust.
4 (c) Retirement or pension benefits received by a surviving
5 spouse if those benefits qualified for a deduction prior to the
6 decedent's death. Benefits received by a surviving child are not
7 deductible.
8 (d) Retirement and pension benefits do not include:
9 (i) Amounts received from a plan that allows the employee to
10 set the amount of compensation to be deferred and does not
11 prescribe retirement age or years of service. These plans
12 include, but are not limited to, all of the following:
13 (A) Deferred compensation plans under section 457 of the
14 internal revenue code.
15 (B) Distributions from plans under section 401(k) of the
16 internal revenue code other than plans described in subdivision
17 (a)(iv).
18 (C) Distributions from plans under section 403(b) of the
19 internal revenue code other than plans described in subdivision
20 (a)(iii).
21 (ii) Premature distributions paid on separation, withdrawal,
22 or discontinuance of a plan prior to the earliest date the
23 recipient could have retired under the provisions of the plan.
24 (iii) Payments received as an incentive to retire early unless
25 the distributions are from a pension trust.
26 (9) In determining taxable income under this section, the
27 following limitations and restrictions apply:
1 (a) For a person born before 1946, this subsection provides
2 no additional restrictions or limitations under subsection
3 (1)(f).
4 (b) For a person born in 1946 through 1952, the sum of the
5 deductions under subsection (1)(f)(i), (ii), and
(iv) is limited to
6 $20,000.00 for a single return and $40,000.00 for a joint return.
7 After that person reaches the age of 67, the deductions under
8 subsection (1)(f)(i), (ii), and (iv) do not apply and that person is
9 eligible for a deduction of $20,000.00 for a single return and
10 $40,000.00 for a joint return, which deduction is available
11 against all types of income and is not restricted to income from
12 retirement or pension benefits. However if that person's total
13 household resources exceed $75,000.00 for a single return or
14 $150,000.00 for a joint return, that person is not eligible for a
15 deduction of $20,000.00 for a single return and $40,000.00 for a
16 joint return. A person that takes the deduction under subsection
17 (1)(e) is not eligible for the unrestricted deduction of
18 $20,000.00 for a single return and $40,000.00 for a joint return
19 under this subdivision.
20 (c) For a person born after 1952, the deduction under
21 subsection (1)(f)(i), (ii), or (iv) does not apply. When that person
22 reaches the age of 67, that person is eligible for a deduction of
23 $20,000.00 for a single return and $40,000.00 for a joint return,
24 which deduction is available against all types of income and is
25 not restricted to income from retirement or pension benefits. If
26 a person takes the deduction of $20,000.00 for a single return
27 and $40,000.00 for a joint return, that person shall not take the
1 deduction under subsection (1)(f)(iii) and shall not take the
2 personal exemption under subsection (2). That person may elect
3 not to take the deduction of $20,000.00 for a single return and
4 $40,000.00 for a joint return and elect to take the deduction
5 under subsection (1)(f)(iii) and
the personal exemption under
6 subsection (2) if that election would reduce that person's tax
7 liability. However, if that person's total household resources
8 exceed $75,000.00 for a single return or $150,000.00 for a joint
9 return, that person is not eligible for a deduction of $20,000.00
10 for a single return and $40,000.00 for a joint return. A person
11 that takes the deduction under subsection (1)(e) is not eligible
12 for the unrestricted deduction of $20,000.00 for a single return
13 and $40,000.00 for a joint return under this subdivision.
14 (d) For a joint return, the limitations and restrictions in
15 this subsection shall be applied based on the age of the older
16 spouse filing the joint return.
17 (9) (10) As
used in this section, :
18 (a) "Oil "oil
and gas" means oil and gas that is
subject to
19 severance tax under 1929 PA 48, MCL 205.301 to 205.317.
20 (b) "Total household resources" means that term as
defined
21 in chapter 9.
22 Sec. 274. (1) For the 2012 tax year and each tax year after
23 2012 and subject to the limitations in this section, a claimant
24 who has adjusted gross income of $200,000.00 or less and who is a
25 resident of this state may claim a credit against the tax due
26 under this part for fees and tuition paid by the claimant on
27 behalf of the claimant or any other student to a qualified
1 institution of higher learning.
2 (2) A claimant may claim a credit under this section equal
3 to 8.0% of the sum of all fees and tuition paid, not to exceed
4 $375.00 for each student for each tax year. A credit shall not be
5 claimed under this section for more than 4 tax years for any 1
6 student.
7 (3) The credit under this section may be claimed on a
8 separate form exclusive of any other form required by this part.
9 The department may require reasonable proof from the claimant in
10 support of the fees and tuition payments claimed under this
11 section.
12 (4) The total amount of credits claimed in a tax year for
13 tuition and fees paid by or on behalf of any 1 student shall not
14 exceed the maximum amount allowable under subsection (2).
15 (5) As used in this section:
16 (a) "Fees" means fees required of and uniformly paid by all
17 students and that have been promulgated and published in the
18 catalog of the qualified institution of higher learning.
19 (b) "Qualified institution of higher learning" means an
20 educational institution located within this state that meets all
21 of the following criteria:
22 (i) It maintains a regular faculty and curriculum and has a
23 regularly enrolled body of students in attendance at the place
24 where its educational activities are carried on.
25 (ii) It regularly offers education above the twelfth grade.
26 (iii) It awards associate, bachelor's, master's, or doctoral
27 degrees or a combination of those degrees or higher education
1 credits acceptable for those degrees granted by other
2 institutions of higher learning.
3 (iv) It is recognized by the state board of education as an
4 institution of higher learning and appears as an institution of
5 higher learning in an annual publication of the department of
6 education entitled "The Directory of Institutions of Higher
7 Education".
8 (v) Its instructional programs are not comprised solely of
9 sectarian instruction or religious worship.
10 (vi) The institution has provided a letter of notification to
11 the state treasurer before July 1 of the tax year that states
12 that the institution will not increase fees and tuition rates
13 during the ensuing academic year by more than the annual average
14 percentage increase in the United States consumer price index in
15 the immediately preceding tax year.
16 (c) "Tuition" means in-state tuition less any refunds of
17 tuition received by the claimant or student paid for any of the
18 following:
19 (i) Credits for an undergraduate degree program.
20 (ii) Credits granted by a community college or a 2-year
21 private college toward a degree program or granted for the
22 purpose of transferring those credits toward an undergraduate
23 degree program.
24 Sec. 520. (1) Subject to the limitations and the definitions
25 in this chapter, a claimant may claim against the tax due under
26 this part for the tax year a credit for the property taxes on the
27 taxpayer's homestead deductible for federal income tax purposes
1 pursuant to section 164 of the internal revenue code, or that
2 would have been deductible if the claimant had not elected the
3 zero bracket amount or if the claimant had been subject to the
4 federal income tax. The property taxes used for the credit
5 computation shall not be greater than the amount levied for 1 tax
6 year. An owner is not eligible for a credit under this section if
7 the taxable value of his or her homestead excluding the portion
8 of a parcel of real property that is unoccupied and classified as
9 agricultural for ad valorem tax purposes in the year for which
10 the credit is claimed is greater than $135,000.00. As used in
11 this subsection, "taxable value" means that value determined
12 under section 27a of the general property tax act, 1893 PA 206,
13 MCL 211.27a.
14 (2) A person who rents or leases a homestead may claim a
15 similar credit computed under this section and section 522 based
16 upon 17% of the gross rent paid for tax years before the 1994 tax
17 year, or 20% of the gross rent paid for tax years after the 1993
18 tax year. A person who rents or leases a homestead subject to a
19 service charge in lieu of ad valorem taxes as provided by section
20 15a of the state housing development authority act of 1966, 1966
21 PA 346, MCL 125.1415a, may claim a similar credit computed under
22 this section and section 522 based upon 10% of the gross rent
23 paid.
24 (3) If the credit claimed under this section and section 522
25 exceeds the tax liability for the tax year or if there is no tax
26 liability for the tax year, the amount of the claim not used as
27 an offset against the tax liability shall, after examination and
1 review, be approved for payment, without interest, to the
2 claimant. In determining the amount of the payment under this
3 subsection, withholdings and other credits shall be used first to
4 offset any tax liabilities.
5 (4) If the homestead is an integral part of a multipurpose
6 or multidwelling building that is federally aided housing or
7 state aided housing, a claimant who is a senior citizen entitled
8 to a payment under subsection (2) may assign the right to that
9 payment to a mortgagor if the mortgagor reduces the rent charged
10 and collected on the claimant's homestead in an amount equal to
11 the tax credit payment provided in this chapter. The assignment
12 of the claim is valid only if the Michigan state housing
13 development authority, by affidavit, verifies that the claimant's
14 rent has been so reduced.
15 (5) Only the renter or lessee shall claim a credit on
16 property that is rented or leased as a homestead.
17 (6) A person who discriminates in the charging or collection
18 of rent on a homestead by increasing the rent charged or
19 collected because the renter or lessee claims and receives a
20 credit or payment under this chapter is guilty of a misdemeanor.
21 Discrimination against a renter who claims and receives the
22 credit under this section and section 522 by a reduction of the
23 rent on the homestead of a person who does not claim and receive
24 the credit is a misdemeanor. If discriminatory rents are charged
25 or collected, each charge or collection of the higher or lower
26 payment is a separate offense. Each acceptance of a payment of
27 rent is a separate offense.
1 (7) A person who received aid to families with dependent
2 children, state family assistance, or state disability assistance
3 pursuant to the social welfare act, 1939 PA 280, MCL 400.1 to
4 400.119b, in the tax year for which the person is filing a return
5 shall have a credit that is authorized and computed under this
6 section and section 522 reduced by an amount equal to the product
7 of the claimant's credit multiplied by the quotient of the sum of
8 the claimant's aid to families with dependent children, state
9 family assistance, and state disability assistance for the tax
10 year divided by the claimant's total household resources. The
11 reduction of credit shall not exceed the sum of the aid to
12 families with dependent children, state family assistance, and
13 state disability assistance for the tax year. For the purposes of
14 this subsection, aid to families with dependent children does not
15 include child support payments that offset or reduce payments
16 made to the claimant.
17 (8) A credit under subsection (1) or (2) shall be reduced by
18 10% for each claimant whose total household resources exceed
19 $41,000.00 $73,650.00
and by an additional 10% for each
increment
20 of $1,000.00 of total household resources in excess of
21 $41,000.00.$73,650.00.
22 (9) If the credit authorized and calculated under this
23 section and section 522 and adjusted under subsection (7) or (8)
24 does not provide to a senior citizen who rents or leases a
25 homestead that amount attributable to rent that constitutes more
26 than 40% of the total household resources of the senior citizen,
27 the senior citizen may claim a credit based upon the amount of
1 total household resources attributable to rent as provided by
2 this section.
3 (10) A senior citizen whose gross rent paid for the tax year
4 is more than the percentage of total household resources
5 specified in subsection (9) for the respective tax year may claim
6 a credit for the amount of rent paid that constitutes more than
7 the percentage of the total household resources of the senior
8 citizen specified in subsection (9) and that was not provided to
9 the senior citizen by the credit computed pursuant to this
10 section and section 522 and adjusted pursuant to subsection (7)
11 or (8).
12 (11) The department may promulgate rules to implement
13 subsections (9) to (15) and may prescribe a table to allow a
14 claimant to determine the credit provided under this section and
15 section 522 in the instruction booklet that accompanies the
16 respective income tax or property tax credit forms used by
17 claimants.
18 (12) A senior citizen may claim the credit under subsections
19 (9) to (15) on the same form as the property tax credit permitted
20 by subsection (2). The department shall adjust the forms
21 accordingly.
22 (13) A senior citizen who moves to a different rented or
23 leased homestead shall determine, for 2 tax years after the move,
24 both his or her qualification to claim a credit under subsections
25 (9) to (15) and the amount of a credit under subsections (9) to
26 (15) on the basis of the annualized final monthly rental payment
27 at his or her previous homestead, if this annualized rental is
1 less than the senior citizen's actual annual rental payments.
2 (14) For a return of less than 12 months, the claim for a
3 credit under subsections (9) to (15) shall be reduced
4 proportionately.
5 (15) The total credit allowed by this section and section
6 522 shall not exceed $1,200.00 per year.
7 Sec. 522. (1) The amount of a claim made pursuant to this
8 chapter shall be determined as follows:
9 (a) A claimant who is not a senior citizen is entitled to a
10 credit against the state income tax liability under this part
11 equal to 60% of the amount by which the property taxes on the
12 homestead, or the credit for rental of the homestead for the tax
13 year, exceeds 3.5% of the claimant's total household resources
14 for that tax year.
15 (b) A claimant who is a senior citizen is entitled to a
16 credit against the state income tax liability under this part
17 equal to the following:
18 (i) For a
claimant with total household resources of
19 $21,000.00 or less, an amount as determined in accordance with
20 subdivision (c).
21 (ii) For
a claimant with total household resources of more
22 than $21,000.00 and less than or equal to $22,000.00, an amount
23 equal to 96% of the difference between the property taxes on the
24 homestead or the credit for rental of the homestead for the tax
25 year and 3.5% of total household resources.
26 (iii) For
a claimant with total household resources of more
27 than $22,000.00 and less than or equal to $23,000.00, an amount
1 equal to 92% of the difference between the property taxes on the
2 homestead or the credit for rental of the homestead for the tax
3 year and 3.5% of total household resources.
4 (iv) For
a claimant with total household resources of more
5 than $23,000.00 and less than or equal to $24,000.00, an amount
6 equal to 88% of the difference between the property taxes on the
7 homestead or the credit for rental of the homestead for the tax
8 year and 3.5% of total household resources.
9 (v) For a
claimant with total household resources of more
10 than $24,000.00 and less than or equal to $25,000.00, an amount
11 equal to 84% of the difference between the property taxes on the
12 homestead or the credit for rental of the homestead for the tax
13 year and 3.5% of total household resources.
14 (vi) For
a claimant with total household resources of more
15 than $25,000.00 and less than or equal to $26,000.00, an amount
16 equal to 80% of the difference between the property taxes on the
17 homestead or the credit for rental of the homestead for the tax
18 year and 3.5% of total household resources.
19 (vii) For
a claimant with total household resources of more
20 than $26,000.00 and less than or equal to $27,000.00, an amount
21 equal to 76% of the difference between the property taxes on the
22 homestead or the credit for rental of the homestead for the tax
23 year and 3.5% of total household resources.
24 (viii)
For a claimant with total household resources of more
25 than $27,000.00 and less than or equal to $28,000.00, an amount
26 equal to 72% of the difference between the property taxes on the
27 homestead or the credit for rental of the homestead for the tax
1 year and 3.5% of total household resources.
2 (ix) For
a claimant with total household resources of more
3 than $28,000.00 and less than or equal to $29,000.00, an amount
4 equal to 68% of the difference between the property taxes on the
5 homestead or the credit for rental of the homestead for the tax
6 year and 3.5% of total household resources.
7 (x) For a
claimant with total household resources of more
8 than $29,000.00 and less than or equal to $30,000.00, an amount
9 equal to 64% 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 (xi) For
a claimant with total household resources of more
13 than $30,000.00, an amount equal to 60% of the difference between
14 the property taxes on the homestead or the credit for rental of
15 the homestead for the tax year and 3.5% of total household
16 resources.
17 (b) (c) A
claimant who is a senior citizen with total
18 household resources of $21,000.00 or less 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 total household resources for that tax year computed
1 as follows:
|
2 |
Total household resources Percentage |
|
3 |
Not over $3,000.00 .0% |
|
4 |
Over $3,000.00 but not over $4,000.00 1.0% |
|
5 |
Over $4,000.00 but not over $5,000.00 2.0% |
|
6 |
Over $5,000.00 but not over $6,000.00 3.0% |
|
7 |
Over $6,000.00 3.5% |
8 (d) A claimant who is an eligible serviceperson, eligible
9 veteran, or eligible widow or widower is entitled to a credit
10 against the state income tax liability for a percentage of the
11 property taxes on the homestead for the tax year not in excess of
12 100% determined as follows:
13 (i) Divide the taxable value allowance specified in section
14 506 by the taxable value of the homestead or, if the eligible
15 serviceperson, eligible veteran, or eligible widow or widower
16 leases or rents a homestead, divide 17% of the total annual rent
17 paid for tax years before the 1994 tax year, or 20% of the total
18 annual rent paid for tax years after the 1993 tax year on the
19 property by the property tax rate on the property.
20 (ii) Multiply the property taxes on the homestead by the
21 percentage computed in subparagraph (i).
22 (e) A claimant who is blind is entitled to a credit against
23 the state income tax liability for a percentage of the property
24 taxes on the homestead for the tax year determined as follows:
25 (i) If the taxable value of the homestead is $3,500.00 or
26 less, 100% of the property taxes.
1 (ii) If the taxable value of the homestead is more than
2 $3,500.00, the percentage that $3,500.00 bears to the taxable
3 value of the homestead.
4 (2) A person who is qualified to make a claim under more
5 than 1 classification shall elect the classification under which
6 the claim is made.
7 (3) Only 1 claimant per household for a tax year is entitled
8 to the credit, unless both the husband and wife filing a joint
9 return are blind, then each shall be considered a claimant.
10 (4) As used in this section, "totally and permanently
11 disabled" means disability as defined in section 216 of title II
12 of the social security act, 42 USC 416.
13 (5) A senior citizen who has total household resources for
14 the tax year of $6,000.00 or less and who for 1973 received a
15 senior citizen homestead exemption under former section 7c of the
16 general property tax act, 1893 PA 206, may compute the credit
17 against the state income tax liability for a percentage of the
18 property taxes on the homestead for the tax year determined as
19 follows:
20 (a) If the taxable value of the homestead is $2,500.00 or
21 less, 100% of the property taxes.
22 (b) If the taxable value of the homestead is more than
23 $2,500.00, the percentage that $2,500.00 bears to the taxable
24 value of the homestead.
25 (6) For a return of less than 12 months, the claim shall be
26 reduced proportionately.
27 (7) The department may prescribe tables that may be used to
1 determine the amount of the claim.
2 (8) The total credit allowed in this section for each year
3 after December 31, 1975 shall not exceed $1,200.00 per year.
4 (9) The total credit allowable under this part and part 361
5 of the natural resources and environmental protection act, 1994
6 PA 451, MCL 324.36101 to 324.36117, shall not exceed the total
7 property tax due and payable by the claimant in that year. The
8 amount by which the credit exceeds the property tax due and
9 payable shall be deducted from the credit claimed under part 361
10 of the natural resources and environmental protection act, 1994
11 PA 451, MCL 324.36101 to 324.36117.
12 Enacting section 1. This amendatory act is retroactive and
13 effective for taxes levied on and after January 1, 2012.