Lowering MI Costs Plan Becomes Law, Repeals the Pension Tax and Provides Tax Cuts for Working Families

POAM is reposting this press release from the Michigan Executive Office of the Governor Tuesday, March 7th, Governor Gretchen Whitmer joined Senate Majority Leader Winnie Brinks, Speaker of the House Joe Tate, and members of the Michigan legislature to sign the Lowering MI Costs plan into law. The Lowering MI Costs plan rolls back the retirement tax, putting $1,000 back in the pockets of 500,000 households, and quintuples the Working Families Tax Credit, delivering an average combined tax refund of $3,150 to 700,000 families, directly benefiting nearly one million kids – almost half the kids in Michigan.

Right now, families are facing the pinch and having tough conversations about how to make ends meet. Today, I am proud to sign a $1 billion tax cut for seniors and working families. Getting this done will help people pay the bills, put food on the table, and afford essentials like groceries and school supplies. It will ensure seniors can keep more of what they’ve earned over a lifetime of hard work and put money back in the pockets of 700,000 working families. I will continue to work with our legislative partners to build on this progress, grow our economy, and lower costs for every Michigander.

Today, we’re undoing the unfair, decade-long budget experiment that required some of our most vulnerable to sacrifice even more.Our new majority for the people means putting the real needs of real Michiganders first, and hundreds and thousands of retirees and families earning the least will have a bit of financial breathing room under the Lowering MI Costs Plan. Our legislation is rooted in deeply held core values of the new leadership and our caucuses; values like honesty, pragmatism, and making sure every resident has a shot at financial security and all of the good things that come with it.

Senate Majority Leader Winnie Brinks

We are delivering on our commitment to Michiganders. With the signing of this bill, we are giving retirees back their hard-earned dollars and putting more money into the hands of working families.  This is meaningful relief to help support our residents and it lets them know that their priorities are our priorities.

I’ve held office in the House for three terms, and each term, I introduced a bill to repeal the retirement tax: I’m so happy for Michiganders that we finally got it across the finish line. In addition to repealing the retirement tax, which has been eating away at the finances of older Michiganders for over a decade, we are also expanding the working families tax credit and ensuring that our state is ready to lead in 21st-century green manufacturing. I’m grateful that members on both sides of the aisle could come together, set aside our differences, and do the right thing for our state.

Representative Angela Witwer

When Democrats lead with our values and unite around creating meaningful opportunities, we’re able to do really big things. Michigan’s working families and retirees needed us to go big and we did. I’m proud my working families tax credit expansion is part of this historic, massive tax relief. A million Michigan kids and their working parents will get game-changing stability. Tens of thousands will move out of poverty. Our small businesses will gain from the credit’s incentive to work and our entire state will benefit from the half a billion dollars it will pump back into local economies.

Senator Kristen McDonald-Rivet

Retirement Tax

House Bill 4001, sponsored by State Representative Angela Witwer (D-Delta Township), amends the Income Tax Act to phase out the retirement tax over four years and ultimately deliver an average of $1,000 to 500,000 households. The bills also equalizes the exemption on both public and private pensions.

Working Families Tax Credit

House Bill 4001 will quintuple the Michigan Working Families Tax Credit match of the federal Earned Income Tax Credit to 30%, up from 6%. This expansion will deliver an average combined tax refund of $3,150 to 700,000 families, directly impacting nearly one million kids – almost half the kids in Michigan.

More than a decade ago, this shameful pension tax broke a promise to retirees and forced those on fixed incomes to change their retirement plans when the rules of the game unexpectedly were rewritten. But today, after a 12-year fight and a final push that swamped state legislators with more than 13,300 emails from AARP members, this wrong has been righted, providing relief for half a million current retirees and waves of retirees yet to come. AARP applauds the governor and those legislators who elevated the repeal of this tax as a top priority and voted yes.

For many years, we have advocated for an increase to the state’s Earned Income Tax Credit, and we are thrilled to see Governor Whitmer sign this substantial boost for working families into law today. Raising Michigan’s EITC to 30% of the federal credit will directly benefit more than 2 million Michigan children by providing a meaningful increase to working families’ incomes, many of whom are still struggling in the wake of the pandemic and whose budgets have been strained by inflation. We applaud Gov. Whitmer and the members of the legislature who supported this truly meaningful investment in households across the state.

Dr. Darienne Hudson, President and CEO of United Way for Southeastern Michigan

The Michigan Education Association applauds Gov. Whitmer for providing relief to hard-working retirees by rolling back the unfair retirement tax. Many Michigan educators planned for their retirement expecting their pensions would be tax-free — but a decade ago, retirees had the rug pulled out from under them through an unfair tax hike on those who could least afford it. The governor and our new legislative leaders have righted a wrong, and thanks to their hard-fought efforts, Michigan seniors and families will finally receive some much-need money back in their hands.

— Michigan Education Association President Paula Herbart, a veteran teacher from Macomb County

POAM went before the Senate Finance, Insurance and Consumer Protection committee chaired by Sen. Mary Cavanagh to advocate for this bill on behalf of the law enforcement community. POAM was the only active police union in Michigan at committee and in public support of this legislation. We continued to advocate for this legislation until it passed the legislature and the governor signed it into law.

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